Climate Change Impacts of Intercity Transport in the Context of External Costs and Their Internalisation

Although the climate change issues of intercity transport are in the focus of this book, it is necessary to discuss their impacts in the context of external costs of transport and their internalisation. The reason is that the external costs of transport—e.g. stemming from noise, air pollution or uninsured accident costs—give rise to applying a number of policy instruments for their internalisation. Examples are taxes, charges, regulation or infrastructure provision for environmentally more friendly transport modes. Instruments which aim at reducing greenhouse gases (GHG) of transport therefore have to be coordinated with instruments which give incentives to lower other external costs. Otherwise, problems can occur with addressing the right lever points of instruments and triggering them optimally, for instance with finding the best balance of ETSs and fuel taxation. Also, the acceptance of stakeholder groups plays a role and might countervail environmental policy programs in which stakeholders feel to be treated unfair because of an overkill of particular instruments (in most cases taxes). Section 3.2 introduces the characteristics of external costs, their relevance with respect to disturbing efficient allocations in the transport sector and the orders of magnitude for the different types of externalities. International examples are presented for the various ways of internalising external costs and the particular impacts of GHG-reducing instruments which partly can be complementary but partly can also be conflicting with other instruments.