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EC study on internalisation of external costs in transport

18 December 2018

The preliminary findings of the EC-funded study on the internalisation of the external costs of transport were presented at a conference in Brussels on 17 December. The study showed that the external costs of the transport system now amount to EUR 1 000 billion per year, with road transport making up the bulk of external costs at 75%, which is not surprising given the relative size of road transport compared to other modes.

The purpose of the study ‘Sustainable Transport Infrastructure Charging and Internationalisation of Transport Externalities’ is to provide a comprehensive overview of the state of play regarding the ‘user pays’ and ‘polluter pays’ principles, the latter of which is treaty-enshrined. It covers all transport modes (road, rail, maritime, internal waters and aviation) and all EU 28 Member States and differentiates between freight and passenger transport.

In terms of methodology, seven external cost categories were defined: 5 environmental ones (air pollution, climate, noise, well-to-tank & habitat damage), accidents and congestion. Total costs are based on the addition of external costs and infrastructure costs. Average external costs by transport mode are based on average occupancy of a particular mode, eg, 1.6 passengers per km in the case of a car and a 2/3 occupancy rate for coaches & buses.

Key findings of the study include:

-          Environmental costs (air pollution, climate, noise, well-to-tank & habitat damage) represent just under one-half of total external costs, followed by accidents (29%) and congestion (27%)

-          The average external cost is highest for the motorcycle at 24 cts/km followed by the car at 8cts/km

-          Road and rail have the highest infrastructure costs

-          Rail users pay for a higher share of the marginal costs than road users

While some aspects of the methodology may be questioned, they will not detract from the key message arising from the study: the user and polluter pays principles are not being applied, rather society and the environment are paying the price for transport. By way of next steps, the study authors will carry out further analysis to establish to what extent transport revenue covers transport expenditure, what is the potential for further internalisation of external costs and which internalisation measures are implemented by Member States. The findings from the completed study will inform future EC transport policy debate.

For further information about the conference, including a link to a summary of the preliminary findings, click here.