Thought that motor tax & insurance / VAT / Duty etc. cover the cost of motoring? Think again – see The True Costs of Automobility

Brief conclusion: The results of this study advocate that the European Union should embark as soon as possible on a process that estimates external costs regularly and develops a smooth integration path of these costs into transport prices: Slowly and steadily, designed well in advance of implementation, with accompanying measures to support adaptation. Let it be remembered that there is no intention of creating additional revenue from transport users: the intention is to give price signals so that everybody adapts and hopefully nobody has to pay these prices. Then, all costs would be reduced, efficiency would be increased.

Full conclusion:

(1) Based on the assumptions described in this study, the cars used within the EU-27 externalize about 373 billion euro per year (high estimate) on to other people, other regions and other generations (low estimate: 258 billion). This is a considerable sum, and it leads to a level of car use that is inefficient from the perspective of society. Because “others” pay for large parts of the costs of transport, Europeans travel by car too much to enable an efficient situation. This in part also explains why there is a high level of congestion in parts of the EU.

(2) The findings of this study clearly show that the frequent claim “that cars cover all their internal and external costs” cannot be sustained. Although no detailed estimation of charges and earmarked taxes of cars attributable to external costs has been made in this study, it is obvious that a sum in the range of 300 to 400 billion of earmarked funds against these costs cannot be reached. On the contrary; it must be stated that car traffic in the EU is highly subsidized by other people and other regions and will be by future generations: residents along an arterial road; taxpayers; elderly people who do not own cars; neighbouring countries; and children, grandchildren and all future generations subsidize today´s traffic. They have to pay, or will have to pay, part of the bill.

(3) These findings suggest that political action is urgently needed. The sooner this happens, the more the transition process can be designed in a smooth, efficient, socially acceptable and environmentally friendly manner. The longer that action is delayed, the stricter, more severe and more expensive this process will be.

(5) Economic price settings and regulatory measures, framework settings and (land use) planning measures need at least as much political attention as technology. User price increases by internalising the external costs in consumer prices, while offering alternatives to car use, can change behaviour substantially – and this may be the cheapest option. Reducing the total number of vehicle kilometres travelled has the greatest effect on greenhouse gas emissions, and there is no risk of recoupling effects.

(6) Technology measures such as biofuels or electric vehicles focus mostly on higher energy efficiencies and on reduction of greenhouse gases. Their effects on all other cost components of external costs are smaller. Noise and air pollution, as well as the large cost component of accidents, remain high, causing ongoing negative effects on society.

(7) Many projections of avoidance curves are based on new technologies aimed only at achieving greenhouse gas emission reductions. The discussion about greenhouse gas reductions in transport is primarily left to automobile technology experts. This approach is misleading because other fields (like economic approaches or land use approaches or behavioural changes) are neglected; and these are fields in which reductions come at a much cheaper price. The TransPoRD-project as a key research project on European greenhouse gas reduction measures in the transport sector concludes: “Technologies known today will not be sufficient to achieve GHG reduction targets of -60% to -80% by 2050”. Consequently, a combination of all possible approaches is needed: internalisation of external costs, pricing measures, technology development, land use changes, strong regulation (e.g. banning fossil fuel cars in certain regions after certain years). Modal split changes are needed to tackle the problem.