The Policy Road to Climate Goals

The global transport sector constitutes a quarter of greenhouse gas emissions — nearly 72% of this derived from road transport. Since many countries remain heavily reliant on fossil fuel-powered vehicles for road transportation despite advances in technology, road transportation must play an outsize role to achieve the Paris Accord goal of 60-80% of GHG emissions by 2050. Since decarbonization costs are lower in road transport than aviation and shipping, it makes sense to start there.

A recent article published in Nature, “Crafting Strong, Integrated Policy Mixes for Deep CO2 Mitigation in Road Transport,” concludes that a mixed set of consumer and regulatory policies could be most effective in reducing GHG emissions within road transport. The authors, Jonn Axsen, Patrick Plötz, and Michael Wolinetz, suggest that an integrative mix of effective GHG mitigation policies has been overlooked and understudied. Along with this suggestion of an integrated policy mix, the authors also recommend an evaluation framework that proposes evaluation based on net impact, cost-effectiveness, political acceptability, and transformative signal (how long can the policy be practiced).

To determine the most effective set of policies, the authors first considered pricing strategies. Although the authors emphasized the importance of pricing in mitigation efforts, they ingeniously consider utilizing pricing as a mechanism to assist with implementing other effective policies. They contend that due to political acceptability and consumer behavior during the vehicle-purchasing experience, consumers underestimate the total value of fuel-savings, resulting in an inelastic response to fuel-price changes. Educating consumers at the point of purchase would be helpful.

The authors further contend that fuel-switching policies should be at the forefront of any new GHG policies since incentivizing low-emission cars can directly lower total fuel consumption and accelerate the uptake of zero-emission vehicles, or ZEVs — which include hybrid, battery-powered, hydrogen vehicles, and vehicles that run on low-carbon fuels. They argue that by focusing explicitly on changes to the types of fuel being used and boosting ZEV uptake, policymakers can reduce GHG emissions. At the same time, the whole world moves away from gasoline and diesel. Policies that lead with fuel-switching incentives would impact the oil and gas industry and force change.

To accomplish this, policymakers must prioritize implementing low-carbon fuel standards, which focus on lowering the carbon content of transportation fuels. Model simulations suggest that LCFS can reduce carbon emissions by 40-75% by 2050. California set such an example in 2007, when it required fuel suppliers to reduce the carbon content of transportation fuels by 10%. This directly resulted in a flurry of investment in low-carbon fuel research, which boosted the market share of these less-toxic fuels. Fortunately, public support for versions of this policy is high in regions where they have been put into place, such as parts of the United States, the European Union, and Canada.

Meanwhile, ZEV mandates have forced automakers to target a particular portion of sales to these vehicles and ensure compliance through financial penalties. California’s ZEV mandate is an excellent standard to follow; espousing similar versions could promote large-scale adoption in the near future. For consumers, ZEV incentives can also significantly impact financial incentives such as purchase subsidies, which would likely boost ZEV sales while attaining high public acceptability. Norway sets a good example: It has achieved the highest ZEV market share globally — more than 50% — through a variety of purchase incentives. And there are other non-financial motivators such as improving home-charging opportunities, which could have an enormous impact on ZEV adoption in the near-term.

Additionally, elevating vehicle emission standards — the minimum performance requirement on fuel consumption and/or tail-pipe CO2 emissions — is critical in this framework. While current emission standards are helping to reduce GHG emissions, the authors propose closing the many compliance mechanism loopholes, such as relaxed standards for larger vehicle classes and inaccurate measurement protocols for tail-pipe emissions.

The authors also highlight travel-reduction policies. Although such policies are not likely to achieve GHG mitigation on their own, greenhouse gas reduction can be optimized through stringent road pricing, which includes fuel taxes, parking costs, and congestion pricing. Several North American studies indicate that strong, active travel measures, such as investing in access to cycling and walking paths, could offset the expected growth in emissions. These measures include infrastructure improvements, safety measures, information campaigns, and the adoption of scooter- and bike-sharing programs. For example: By increasing cycling by 20%, an industrialized country could achieve 40% GHG reductions by 2050. Better transit systems would further enhance the ability to reduce road travel, creating a virtuous cycle.

Ultimately, the authors argue that GHG reduction policies shouldn’t live in a silo. Their evidence suggests that a mix of policies that consider all forms of consumer and producer behavior — from price elasticity to time spent on the road to penalties for bad behavior — would result in effective GHG mitigation in the road transport sector within a reasonable timeframe.

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Axsen, Jonn, Patrick Plötz, & Michael Wolinetz. 2020. “Crafting strong, integrated policy mixes for deep CO2 mitigation in road transport.” Nature Climate Change 10: 809–818. https://doi.org/10.1038/s41558-020-0877-y.