Quantifying Impacts of Transport- Related CO 2 Abatement Policies Roundtable on Transport - Related Climate Change Problems OECD Environment Directorate and International Energy Agency Paris, 18 th February 2000 John Dodgson National Economic Research Associates n/e/r/a Roundtable on Transport - Related Climate Change Problems OECD Environment Directorate and International Energy Agency Paris, 18 th February 2000 John Dodgson National Economic Research Associates n/e/r/a

Annem/jd _colour pc.ppt Structure of this presentation 1.Introduction: objectives and structure 2.The issues that need to be considered 3.The main policy options 4.Developing policy packages: France, the Netherlands, the UK 5.Overall conclusions 5.iPolicy packages 5.ii Quantification 1.Introduction: objectives and structure 2.The issues that need to be considered 3.The main policy options 4.Developing policy packages: France, the Netherlands, the UK 5.Overall conclusions 5.iPolicy packages 5.ii Quantification

n/e/r/a Annem/jd _colour pc.ppt The issues that need to be considered 1.Measuring existing carbon emissions from the transport sector 2.Understanding the way in which these emissions are generated 3.Forecasting emissions in a “Business as Usual” (BAU) case 4.Identifying specific policy options to limit carbon emissions below the levels they would reach in the BAU case 5.Quantifying the impact of particular options both individually, and when combined in policy packages 6.Assessing whether particular policies can be implemented for practical reasons 1.Measuring existing carbon emissions from the transport sector 2.Understanding the way in which these emissions are generated 3.Forecasting emissions in a “Business as Usual” (BAU) case 4.Identifying specific policy options to limit carbon emissions below the levels they would reach in the BAU case 5.Quantifying the impact of particular options both individually, and when combined in policy packages 6.Assessing whether particular policies can be implemented for practical reasons

n/e/r/a Annem/jd _colour pc.ppt The main policy options (I) 1.Economic instruments Increases in fuel taxes Road congestion charging Feebates Other fiscal measures 2.Regulations and guidelines Speed limits Traffic management measures Land use regulations and guidelines 1.Economic instruments Increases in fuel taxes Road congestion charging Feebates Other fiscal measures 2.Regulations and guidelines Speed limits Traffic management measures Land use regulations and guidelines

n/e/r/a Annem/jd _colour pc.ppt The main policy options (II) 3.Voluntary agreements and actions ECMT/ vehicle manufacturing industry joint declaration European Commission/ACEA 1998 agreement 4.Information and training initiatives Consumer fuel-economy information initiative Driver training 5.Research and development 3.Voluntary agreements and actions ECMT/ vehicle manufacturing industry joint declaration European Commission/ACEA 1998 agreement 4.Information and training initiatives Consumer fuel-economy information initiative Driver training 5.Research and development

n/e/r/a Annem/jd _colour pc.ppt Developing policy packages France Sectoral groups of experts produced recommendations. Ministerial meeting on 19th January 2000 Netherlands Option document. Policy document. Independent evaluation. Monitoring United Kingdom Consultation Document (October 1998). Responses (August 1999). Policy report (February 2000?) France Sectoral groups of experts produced recommendations. Ministerial meeting on 19th January 2000 Netherlands Option document. Policy document. Independent evaluation. Monitoring United Kingdom Consultation Document (October 1998). Responses (August 1999). Policy report (February 2000?)

n/e/r/a Annem/jd _colour pc.ppt Policy example (1) increases in fuel duty The UK Fuel Duty Escalator Real value of fuel duty to be increased by at least a fixed percentage every year up to %; %; % Year Index (1990 = 100) Current prices petrol index (1990 = 100) Real petrol price index (1990 = 100)

n/e/r/a Annem/jd _colour pc.ppt The UK fuel duty escalator Expected impacts Mileage driven per vehicle Total vehicle stock New cars: consumers’ choice of vehicle New cars: manufacturers’ decisions about technological characteristics of new cars Second round effects on annual kms driven (“rebound” effects) Vehicle retirement decisions Main quantification approaches Simple elasticity models Disaggregated vehicle stock models Expected impacts Mileage driven per vehicle Total vehicle stock New cars: consumers’ choice of vehicle New cars: manufacturers’ decisions about technological characteristics of new cars Second round effects on annual kms driven (“rebound” effects) Vehicle retirement decisions Main quantification approaches Simple elasticity models Disaggregated vehicle stock models

n/e/r/a Annem/jd _colour pc.ppt A disaggregated vehicle stock model: the UK vehicle market model Car Stock Car Stock Annual km per Vehicle Annual km per Vehicle Fuel Consumption (Litres/km) Fuel Consumption (Litres/km) Base Year cc x x s b = total car stock in base year vintages sbsb  =base year fuel consumption s f = total car stock in forecast year Year on Year Survival Matrix Year on Year Survival Matrix cc =x Forecast Year vintages Car Stock Car Stock new car purchases sfsf x cc x Annual km per Vehicle Annual km per Vehicle Fuel Consumption (Litres/km) Fuel Consumption (Litres/km) new car fuel consumption  =forecast year fuel consumption

n/e/r/a Annem/jd _colour pc.ppt Policy example (2) feebates (the Netherlands) l Car purchasers pay a fee or receive a rebate based on the relationship between the car fuel consumption and the “zero point” l Quantification based on work for the US Department of Energy by Kenneth Train and others l The problem is to predict car purchase responses in the face of changed costs l US work used a nested logit model (household choice of number and types of cars to own) l Car purchasers pay a fee or receive a rebate based on the relationship between the car fuel consumption and the “zero point” l Quantification based on work for the US Department of Energy by Kenneth Train and others l The problem is to predict car purchase responses in the face of changed costs l US work used a nested logit model (household choice of number and types of cars to own)

n/e/r/a Annem/jd _colour pc.ppt New car purchases: a critical modelling task Car Stock Car Stock Annual km per Vehicle Annual km per Vehicle Fuel Consumption (Litres/km) Fuel Consumption (Litres/km) Base Year cc x x s b = total car stock in base year vintages sbsb  =base year fuel consumption s f = total car stock in forecast year Year on Year Survival Matrix Year on Year Survival Matrix cc x x =x Forecast Year vintages Car Stock Car Stock Annual km per Vehicle Annual km per Vehicle Fuel Consumption (Litres/km) Fuel Consumption (Litres/km) new car purchases sfsf new car fuel consumption  =forecast year fuel consumption

n/e/r/a Annem/jd _colour pc.ppt Policy example (3) reduction/enforcement of speed limits Quantification issues 1.Measurement of existing traffic speeds 2.Assessment of how reduction in speeds reduces fuel consumption per km Quantification issues 1.Measurement of existing traffic speeds 2.Assessment of how reduction in speeds reduces fuel consumption per km 3.Assessment of effectiveness of enforcement 4.Second-round effects (see Netherlands study by Peeters et al) 3.Assessment of effectiveness of enforcement 4.Second-round effects (see Netherlands study by Peeters et al) b b a a Speed (km/hour) Fuel Consumption (Litres/km) Fuel Consumption (Litres/km)

n/e/r/a Annem/jd _colour pc.ppt Policy example (4) the EU/ACEA voluntary agreement l Achieve an average CO 2 emissions figure of 140g/km by 2008 for all new cars sold in EU l Market individual models of cars with CO 2 emissions of 120g/km or less by 2000 l Indicative intermediate target of g/km in 2003 as a basis for monitoring progress l Review potential for additional improvements - with a view to moving the car fleet average further towards 120g/km by 2012 l Achieve an average CO 2 emissions figure of 140g/km by 2008 for all new cars sold in EU l Market individual models of cars with CO 2 emissions of 120g/km or less by 2000 l Indicative intermediate target of g/km in 2003 as a basis for monitoring progress l Review potential for additional improvements - with a view to moving the car fleet average further towards 120g/km by 2012

n/e/r/a Annem/jd _colour pc.ppt Assessing the impact of the voluntary agreement Car Stock Car Stock Annual km per Vehicle Annual km per Vehicle Fuel Consumption (Litres/km) Fuel Consumption (Litres/km) Base Year cc x x s b = total car stock in base year vintages sbsb  =base year fuel consumption s f = total car stock in forecast year Year on Year Survival Matrix Year on Year Survival Matrix cc x x =x Forecast Year vintages Car Stock Car Stock Annual km per Vehicle Annual km per Vehicle Fuel Consumption (Litres/km) Fuel Consumption (Litres/km) new car purchases sfsf new car fuel consumption  =forecast year fuel consumption

n/e/r/a Annem/jd _colour pc.ppt Issues with the voluntary agreement l Will manufacturers achieve the improvements in technology? l Can they agree on how the savings are achieved between them? l Will consumers choose to purchase the “right” vehicles? l Will reductions in cost per km lead to a rebound effect on kms run? Clear importance of effective monitoring l Will manufacturers achieve the improvements in technology? l Can they agree on how the savings are achieved between them? l Will consumers choose to purchase the “right” vehicles? l Will reductions in cost per km lead to a rebound effect on kms run? Clear importance of effective monitoring

n/e/r/a Annem/jd _colour pc.ppt Overall conclusions: policy packages 1.Importance of non-car measures (don’t treat as an afterthought) 2.Scope for improvement in fuel efficiency of public transport 3.Non-petroleum-based modes should be considered 4.Mix of types of option will reflect national approaches to policy issues 5.Construction of packages of measures will be a complex iterative process, with inevitable delays 6.Importance of technological measures to reduce new car fuel consumption - the “voluntary agreement” - the need for an “early warning system” 7.Do not delay implementation of other measures 1.Importance of non-car measures (don’t treat as an afterthought) 2.Scope for improvement in fuel efficiency of public transport 3.Non-petroleum-based modes should be considered 4.Mix of types of option will reflect national approaches to policy issues 5.Construction of packages of measures will be a complex iterative process, with inevitable delays 6.Importance of technological measures to reduce new car fuel consumption - the “voluntary agreement” - the need for an “early warning system” 7.Do not delay implementation of other measures

n/e/r/a Annem/jd _colour pc.ppt Overall conclusions: quantification 1.Need for transparency in the explanation of how the impacts of different policies have been quantified 2.Value of independent evaluation of national plans 3.Need for a clear definition of what BAU scenarios imply 4.Danger of “double counting” within policy packages 5.Need to draw on existing models 6.Value of disaggregate vehicle stock models 7.Need for care in taking account of rebound effects 8.Important role for ex post evaluation of policy measures 9.Value of sharing experience of quantification internationally