Emissions Trading for Road Transportation

Greenhouse gas emissions from road transport are increasing all over the world and are responsible for a rising share in greenhouse gas emissions. In 1997, the Kyoto protocol set legally binding quantified greenhouse gas emission reduction targets for industrialised countries. In order to achieve these targets with most cost-effective means, the instrument of emissions trading was introduced. This paper outlines the various policies and measures which can lead to CO2 reductions in the road transport sector. Emissions trading is granted the main attention. Its ability to achieve emission reductions at lowest cost can unify all stakeholders in the attempt to reduce CO2 emissions from road transportation. This goal is reflected in the discussion of the additional costs and benefits of an emissions trading system to automotive manufacturers as well as vehicle purchasers. The outcome is somewhat surprising in that this emissions trading program can at least be economically neutral to all parties. The paper addresses political decision makers, governments as well as companies in the transport sector that are faced with emission reduction requirements.