The study takes a closer look at the policy-induced price signals that affect transport in Europe (and abroad) with a focus on road private transport in particular.

As the transport sector has a significant greenhouse gases reduction potential and in contrast to common wisdom of high costs of emission reduction, there is a substantial reduction potential at a very low (or even negative) abatement costs. A broad range of transport-related taxes, duties, levies and charges, as well as a number of subsidies, influences any consumption and investment decision related to transport. The deployment of these instruments is reviewed in Chapter 1 of this study.

Chapter 2 of the study discusses the different regulatory systems that exist in the U.S. to regulate motor vehicle emissions and fuel efficiency. After presenting the three regulatory systems (the Environmental Protection Agency (EPA), the National Highway Traffic Safety Administration (NHTSA), and the State of California’s Air Resources Board (CARB)) the chapter presents policy developments that have taken place in the U.S. in recent years and concludes with a short policy assessment.

In Chapter 3 the research on elasticities in transport are reviewed in detail. The tentative conclusion that can be drawn after this review are that people are more sensitive to road prices, tolls and parking fees than to fuel prices, to quality of public transport services than to a reduction of fares, more so in areas with viable alternatives than in areas without, and more for leisure trips than for business trips and commuting.

Chapter 4 of the study takes a closer look at barriers, constraints and path-dependencies that present a hurdle for the effectiveness of carbon pricing in the road transport sector. Of these different barriers and constraints, this subchapter investigates three selected examples: fuel tourism, tax benefits for company cars, and the intra-European trading patterns of second-hand vehicles.

A largely underexploited potential is likely with soft measures that are discussed at length in Chapter 5. In Chapter 6, the effects that policy measures promoting the adoption of electric vehicles have on those vehicles’ total cost of ownership (TCO) is investigated. The study finds that the implementation of large registration fees for non-EVs and a bonus-malus scheme, which accrue significant consumer savings very early on in the life of the vehicle are particularly effective. To further explore electric vehicle purchasing decisions, existing studies on (stated) preferences for low carbon vehicles are reviewed in Chapter 7.