The EU is currently discussing its climate and energy policy for 2030. As part of these discussions German carmakers have been advocating the inclusion of road transport emissions in the EU Emissions Trading System (ETS). Some countries like Denmark also support the idea, although for different reasons. This briefing explains why transport’s inclusion in the ETS would delay emissions reductions in transport, undermine more effective climate policies for transport, and weaken the ETS and increase costs.
While this paper argues against including road transport in the cross-sector ETS, it does not argue against much more transport-specific forms of credit trading. Europe can draw lessons from Californian policies that allow trading of low-carbon vehicle and fuel credits between vehicle and energy suppliers respectively that truly encourage low-carbon investment and innovation in transport.
