Greening transport

Globalisation, transport and the environment


Transport plane The results of an OECD analysis on the impacts of globalisation on transport levels, the consequences for the environment, and the policy instruments that can be used to limit any negative impacts for the environment are described below.

How globalisation affects the environment – Overall impacts

It is difficult to draw firm conclusions regarding the impacts of economic openness on the environment, because several interacting factors come into play. The findings of a number of studies are now available.

In general, increased economic openness (mainly through trade and investment liberalisation) seems to have had, at worst, a benign effect on emissions of localised pollutants. For example, it has been found that a 10% increase in trade intensity leads to approximately a 4% to 9% reduction in sulphur dioxide (SO2) concentrations. Other studies have found that openness appears to have a beneficial impact on SO2 and nitrous dioxide (NOx), but no statistically significant impact on particulates matter (PM) emissions. Still another study found that trade intensity increases land releases of pollutants, but either reduces or has no statistically significant effect on air, water and underground releases.

It is not clear how the relative price changes that result from economic openness will affect the environmental composition of economic activity: some countries will produce more environmentally intensive goods, others will produce fewer. On the other hand, liberalisation will raise incomes overall, potentially increasing the willingness to pay for environmental improvements: these potential income effects could outweigh the negative scale effects associated with increased economic activity. When combined with the positive effects associated with technology transfer, the net effect on local pollutants could be positive.

However, the evidence concerning carbon dioxide (CO2) and other greenhouse gas emissions is less encouraging, as the net effect of trade liberalisation is likely to be negative, according to a number of studies. One of the explanations for the pessimistic assessments of trade’s impact on greenhouse gas emissions is their global nature. Not only are the costs of CO2 emissions shared with citizens abroad, but many greenhouse emissions are associated with fossil fuel use, for which few economically viable substitutes have emerged. The income and other technique effects that are largely responsible for reductions in local air pollutants do not seem to have the same force when the pollutant in question burdens the global population rather than just citizens residing within any one government’s jurisdiction.

What impact has globalisation had on transport? And what have been the consequences for the environment?

This book "Globalisation, Transport and the Environment" (2010) aims to answer these questions and more. It looks in detail at how globalisation has affected activity levels in maritime shipping, aviation, and road and rail freight, and assesses the impact that changes in activity levels have had on the environment.

This book is based on a series of papers prepared for an OECD/ITF Global Forum on Transport and Environment in a Globalising World (Guadalajara, Mexico, November 2008).



Globalisation, Transport and the Environment

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Globalisation and international transport activity

The 21st century has seen the continued internationalisation of the world’s economy, as well as the greater globalisation of cultures and politics. Economically, globalisation helps to facilitate an increased division of labour, and to exploit countries’ comparative advantage on a wider scale. In the longer term, globalisation also stimulates technology and labour transfers, and allows the dynamism that accompanies entrepreneurial activities to stimulate the development of new technologies and processes that lead to global environmental and welfare improvements.

Transport boat Shipping - Increasing globalisation has led to a strong increase in international shipping activity. Trade and shipping are closely linked, although some disagreement remains about the degree to which energy use in shipping is coupled with the movement of waterborne commerce. Some debate continues about the best estimates of global fuel usage, but the major elements of activity-based inventories are widely accepted. Ocean-going ships consume about 2% to 3% – perhaps 4% – of world fossil fuels.
Transport plane Aviation - Rapid changes in international air transport has been a major contributor to globalisation and is continually reshaping to meet the demands of the economic and social integration that globalisation engenders. Some 40% of world trade (by value) now moves by air. To allow the flows of ideas, goods and persons that facilitate efficiency on a global scale, air transport has played a key role in the past, and is poised to continue this role. Yet, as the strong growth in air transport activity is straining air-related infrastructure (such as airports), future growth in the sector could well be constrained by capacity limits.
‌‌Transport rail

Road and rail - With new developments to remove bottlenecks, combined with operational improvements, there is scope for considerable improvement in the efficiency of international road and rail freight in many regions.

In a comparison of total door-to-door transport costs and transit times for a range of transport solutions carrying cargo from Asia to Europe, air transport had the highest cost, but very short transit times. Sea transport provided the lowest cost, but had long transit times. Road freight fell between air and sea, both in terms of cost and transit time. Rail transport exhibited a very wide range of costs and transit times, and showed major differences between the officially scheduled transit times and the actual transit times achieved. For both road and rail freight transport, border crossings represent an important barrier to trade.

There are many opportunities to improve the efficiency and reduce the environmental impact of international road and rail freight transport. Many of these developments require government intervention in the form of changes to regulatory policy, improvements to infrastructure and the breaking-up of public monopolies that currently often offer ill-adapted services. 

Environmental impacts of increased international transport

Figure 1: Vessel traffic densities for year 2000

The graph below shows the geographical distribution of maritime traffic, based on data from the Automated Mutual-Assistance Vessel Rescue System. It illustrates large variations in traffic patterns (and emissions) for different ship types.


Upper left: All cargo and passenger ships in the AMVER merchant fleet. Upper right: Oil tankers. Lower left: Bulk carriers. Lower right: Container vessels. (Source: Endresen, Ø et al. (2004), “Challenges in Global Ballast Water Management”, Marine Pollution Bulletin, Vol. 48, Issues 7-8.)


Environmental impacts of increased international transport

Transport boat Shipping - Global CO2 emissions from maritime shipping almost tripled between 1925 and 2002, and the corresponding SO2 emissions more than tripled. The majority of the ships’ emissions occur in the northern hemisphere, in well-defined system of international sea routes (see Figure 1).

The emission of CO2, NOx, and SO2 by ships correspond to about 2% to 3% (perhaps 4%), 10% to 15%, and 4% to 9% of global anthropogenic emissions, respectively. Ship emissions of e.g. NO2, CO, NMVOCs (non-methane volatile organic compounds), SO2, primary particles, heavy metals and waste cause problems in coastal areas and harbours with heavy traffic. Particularly high increases of short-lived pollutants (e.g. NO2) are found close to regions with heavy traffic e.g. around the North Sea and the English Channel. NO2 concentrations can be more than doubled along the major world shipping routes. Absolute increases in surface ozone (O3) due to ship emissions are pronounced during summer months, with large increases again found in regions with heavy traffic.

Formation of sulphate and nitrate resulting from sulphur and nitrogen emissions causes acidification that might be harmful to ecosystems in regions with low buffering capacity, and lead to harmful health effects. Coastal countries in western Europe, western North America and the Mediterranean are substantially affected by ship emissions in this way.

Figure 2: Yearly average contribution from ship traffic to wet disposition

This Figure shows the impact of ship emissions on wet deposition of nitrate and sulphur. These are major components of acid rain. The largest contributions can be seen in seasons with much rainfall on the west coast of the continents where westerly winds often prevail.


Left: Nitrate. Right: Sulphur. (Source: Dalsøren et al., (2008), “Update on emissions and environmental impacts from the international fleet of ships. The contribution from major ship types and ports”, Atmos. Chem. Phys. Discuss., 8, 18323–18384, 2008,

The large NOx emissions from ship traffic lead to significant increases in hydroxyl (OH), which is the major oxidant in the lower atmosphere. Since reaction with OH is a major way of removing methane from the atmosphere, ship emissions decrease methane concentrations. (Reductions in methane lifetimes due to shipping-based NOx emissions vary between 1.5% and 5% in different calculations.) The effect on concentrations of greenhouse gases (CO2, CH4 and O3) and aerosols have differing impacts on the radiation balance of the earth-atmosphere system. Ship-derived aerosols also cause a significant indirect impact, through changes in cloud microphysics.

Most studies so far indicate that ship emissions actually lead to a net global cooling. However, it should be stressed that the uncertainties with this conclusion are large, in particular for indirect effects, and global temperature is only a first measure of the extent of climate change in any event.

The contribution to climate change from the different components also acts at different temporal and spatial scales. A long-lived, well-mixed component like CO2 has global effects that last for centuries. Shorter-lived species like ozone and aerosols might have effects that are strongly regional and last for only a few days to weeks. The net cooling effect that so far has been found primarily affects ocean areas, and thus does not help alleviate negative impacts of global warming for human habitats.

Limiting the sulphur content in fuel in Emission Control Areas seems to be an efficient measure to reduce sulphate deposition in nearby coastal regions. Several technologies also exist to reduce emissions from ships beyond what is currently legally required.

Transport plane Aviation -Expected technological innovations will probably not prevent an increase in CO2 emissions from aviation either, in light of expected increase in demand – but the rate of technological progress will likely depend on the extent to which the sector faces a price on the CO2it emits. Depending on the technology and scenario used, the average “external” cost of air travel is about EUR 0.01 to EUR 0.05 per passenger-kilometre.

Major airlines use “hub-and-spoke” networks, which means that selected airports receive a relatively large share of all take-offs and landings in the network. As a result, noise pollution in the surrounding areas is relatively high, and passengers travelling indirectly have to make a detour (thereby increasing the total emissions related to their trip). But hub-and-spoke networks might also have environmental benefits, due to environmental economies of scale: larger aircraft with lower emissions per seat can be used because passenger flows are concentrated on fewer links. The literature suggests, however, that the negative environmental effects of hub-and-spoke networks tend to exceed the positive effects. As long as the full external cost is not covered by the ticket price, environmental damage caused by aviation will continue to grow beyond socially optimal levels.

Transport rail

Road and rail - International road and rail freight transport account for a minor, but increasing, share of global transport emissions of air pollutants (e.g. NOx) and noise emissions. The contribution of these emissions to local air pollution is actually decreasing in most parts of the world, mainly due to various vehicle emission standards that have been implemented (and periodically tightened) all over the world. Only in those parts of the world that have an extremely high growth in transport volumes have overall transport-related emissions of local air pollutants not yet decreased.

On the other hand, CO2 emissions from international road freight transport are increasing all over the world, and there is not yet a sign that this trend is to be curbed soon. For this challenging problem, there is no single cure available, and the scale effects will likely outweigh the technological options. A mix of measures, such as road pricing, higher fuel taxes, stricter fuel efficiency standards for vehicles, use of alternative fuels and logistical improvements, can all be needed to reverse these trends.

Policy instruments

Theory suggests that all policy instruments, if properly designed, will reflect the right level of policy ambition (i.e. where marginal benefits just equal marginal costs). Theory also indicates that a cost-effective result is more likely to be realised via market-based instruments (such as taxes and tradable permits) than by using regulatory or voluntary approaches.

On the other hand, there is no silver bullet that can solve all the environmental problems created by transport activity. In some cases, for example regarding emissions of local air pollutants, standards will be the most effective and efficient instruments. A mix of instruments will in many cases be needed. It is, however, important to assess carefully what each instrument adds to the mix, and how the instruments interact. Policy needs in OECD countries are likely to be different from policy needs in developing countries. The optimal instrument mix will therefore vary from situation to situation.

A multilateral approach is preferable on both efficiency and effectiveness grounds (especially over the long term), provided sufficient political will exists internationally to co-operate on solving the underlying environmental problems. The international regulatory framework for greenhouse gases does, however, not assign responsibility to nations for managing emissions from shipping and aviation. Although international regimes can sometimes constrain governments’ ability to regulate activities that are harmful to the environment, international law does provide many opportunities to adopt new instruments to regulate environmental impacts from increased international transport.

On the other hand, the constraints to successful international negotiations will sometimes be rather imposing. International agreements take a long time to put in place; they are also hard to enforce. They might also be characterised by significant “leakage” problems, in the sense that emitters might be able to shop around for less stringent jurisdictions.

International coalitions may also need to be built from the bottom up. One element of this approach would involve regional arrangements among like-minded countries, or among countries that share a common (regional) environmental problem (e.g. SOx). These regional agreements can then serve as building blocks or demonstration experiments toward more international action over the longer term (e.g. linking up emission trading systems in different regions).

Unilateral action also has a role to play, even at the international level. Not only is unilateral action often the most appropriate approach (e.g. when the pollution involved affects only the national territory, which is mostly the case for much of land-based transport), local policies can sometimes help to force subsequent changes within the international regime (e.g. EU noise standards for airplanes were eventually adopted by ICAO, the International Civil Aviation Organization). The power of unilateral action to eventually lead to positive outcomes at the international level over the medium term should therefore not be underestimated.

Although international transport regimes have historically focused on protecting transport activity, there is now a trend toward countries recognising the need for the global transport regimes to deal with environmental problems. ICAO and IMO have been explicitly tasked to address climate change and other environmental challenges arising from international transport. These are encouraging developments.

Priorities for policy action

The climate change issue will clearly lie at the heart of efforts to deal with the environmental impacts of transport that result from globalisation. No other environmental issue has so many potential implications for transport sector policy. Although the specific estimates vary, transport-based CO2 emissions are projected to grow significantly in the coming years. Light duty vehicles on roads will continue to be the largest contributors to this problem, but air-based emissions will grow more rapidly. Some shift toward less carbon-intensive technologies is foreseen, but no significant shift to truly low-carbon technologies is anticipated in most of the current estimates. In other words, incremental, rather than drastic, technological change is foreseen.

Modes for which pre-existing policies are relatively weak, such as shipping and aviation, are ideal candidates for integration into broader efforts to introduce climate change policy frameworks. Global economic activity also leads to problems other than climate change (including local air pollutants, such as NOx, SOx, particulates and noise): these problems will need to be addressed.

At the national or local level, the road transport sector is already quite heavily regulated in one form or another. This implies that further abatement in road transport emissions may be relatively more costly. More cost-effective opportunities may exist in other transport sectors (especially in aviation and shipping) but measures in these sectors will primarily have an impact near airports, harbours and major sea lanes.

At the international level, it may be possible to develop common fuel-efficiency standards, but this would not be straightforward. The international regime related to shipping in particular is still in its early stages of development, so there are opportunities to mould that regime. The International Maritime Organization (IMO) is trying to work toward effective and efficient control polices for shipping, so there are some initiatives being taken toward this goal:

  • Movements of highly hazardous substances should continue to be controlled essentially by regulatory means: bans, prior informed consent rules (e.g. Rotterdam Convention). When the problem involves serious health hazards, the environmental effectiveness objective should take precedence over the economic efficiency goal. Outright bans, combined with total transparency, are the safest ways forward in these circumstances.
  • Some environmental impacts, e.g. exhaust emissions, may effectively be addressed by standards, which should provide as much flexibility as possible for producers to come up with low-cost solutions.
  • The bulk of the “heavy lifting” in the policy response should be given to market-based instruments (taxes and tradable permits).

Inclusion of aviation and maritime transport in cap-and-trade systems would be desirable from a cost-effectiveness point of view. For both of these modes, technological abatement options are limited in the short run because of slow fleet turnover. In the maritime sector, operational measures seem capable of reducing CO2 emissions in the short run, and at low cost. In aviation, there is also some scope for abatement through better air traffic control and airport congestion management, but the main abatement is likely to come from lower demand. Available estimates put an upper bound of about 5% on demand reductions, at prices of around EUR 20 per tonne of CO2. Imperfect competition and airport congestion limit the extent of pass-through, and hence limit the demand responses. The aviation sector, hence, is likely to be a net buyer of emission allowances. Both in aviation and in shipping, there is considerable scope for leakage as long as trading schemes are not comprehensive. Nevertheless, inclusion of these modes in trading schemes is desirable if overall abatement is to be cost effective in the long run.

When it comes to road transport, taxes and tradable permits present a particular problem. The optimal policy response to fuel-related externalities (such as climate change) is different from the optimal policy responses to distance-related externalities (such as congestion, accidents and air pollution). Imposing a fuel tax induces some improvement in both distances travelled and fuel efficiency. But it does not reduce distance-related externalities much, while most studies suggest that distance-related externalities in road transport are significantly higher than fuel-related ones.

A more efficient approach would therefore seem to be to use distance-related taxes, such as road pricing. But the problem with this approach is that the distance travelled is not the most important contributor to GHG emissions – the most important target of climate policies. For climate change, higher fuel efficiency will remain the primary goal, and distance-related taxes would be too indirect.

The case for tighter fuel economy standards in road transport to reduce greenhouse gas emissions is weak. It is, however, sometimes argued that these policies are needed to increase the dispersion of more fuel-efficient vehicles through the fleet. The reason is said to be that the market provides relatively weak incentives to improve fuel economy, given consumers’ response to various uncertainties surrounding investments in fuel economy. If consumers are not willing to pay very much now for fuel economy improvements that only provide economic benefits over a long timescale, producers may not be willing to supply fuel-efficient vehicles either. If the goal is to change engine technologies, one way around this problem could be for the government to force fuel economy into the marketplace via a fuel-economy standard. Possibilities exist in both IMO and ICAO to find new ways of regulating GHG emissions. This could follow the partly successful model of regulating NOx, SOx and noise emissions from air and sea transport.

Ambitious GHG emission abatement strategies will inevitably require technological change. Government technology policies may be needed. The slow fleet turnover rates in both aviation and shipping may need to be increased, e.g. via technology-based public policies. Carrots are always more easily implemented in practice than sticks, so well-designed subsidy arrangements could hold some promise for future policy directions – but there is always a risk that the cost-effectiveness could be low, as the subsidised activities would have been undertaken in any case, and that subsidies are difficult to remove once they are introduced.


Read more

  • OECD work on transport and environment
  • Publications and reports
  • Policy brief: Globalisation, Transport and the Environment
  • Globalisation’s Direct and Indirect Effects on the Environment (2008)
  • The Impacts of Globalisation on International Maritime Transport Activity (2008); Air Transport Activity (2008); Road and Rail Freight Transport activity (2008)
  • The Environmental Impacts of Increased International Maritime Shipping (2008); Road and Rail Freight Transport (2009); Air Transport (2008)
  • Policy Instruments to Limit Negative Environmental Impacts from Increased International Transport: An Economic Perspective (2008) and Constraints and Opportunities in International Law (2008)


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