Carbon pricing in Transport
Impact of ‘Fit for 55’. On July 14 the European Commission presented ‘Fit for 55’ as part of the overall ‘Green Deal’. The ‘Green Deal’ aspires to reduce the overall dependence on fossil fuels. Within that context the ‘Fit for 55 Package’ was presented as part of the overall strategy.
This legislative package aligns the EU’s legislation with the 55% emission reduction target to be achieved by 2030. In order for the transport industry to play its part, the EU is increasing its efforts to put a price on CO2 emissions.
Road charged based on CO2 emissions
The use of road infrastructure by heavy-duty vehicles is regulated through the Eurovignette Directive. The Member States get the possibility to set up combined charging system for heavy-duty vehicles. This is based on both time-based and distanced-based elements. It allows full implementation of the user-pays and polluter-pays principles. The decarbonization of heavy-duty road transport will also be further incentivized by the introduction of a new system of varying road charges based on CO2 emissions.
The new targets require average emissions of new cars to come down by 55% from 2030 and 100% from 2035, compared to 2021 levels. The European Commission sees no future for the internal combustion engine in the future of the European transport sector.
Considering this, it is to be expected that the various ‘Fit for 55’ carbon pricing measures in the road transport sector will stimulate the market demand for zero- and low emission vehicles.
Next to new developments on zero- and low emission vehicles also CO2 will become more important.
EU Emissions Trading System
The EU Emissions Trading System (EU ETS), the EU’s instrument to measure and price carbon emissions per unit, is also being revised as part of the Fit for 55 Package. It increases the ambition to reduce the number of EU-wide annual allowances at a quicker pace. This will significantly drive up the price for CO2 per ton by cutting supply of emissions permits. It also extends its scope towards other sectors, including emissions from maritime transport.
So the clear thing to do now, as this all unfolds, is to reduce carbon emisson as much as possible.
The Energy Taxation Directive (ETD) sets the rules for the taxation of energy products such as motor fuels or electricity. The Commission also proposed a revision as part of the Fit for 55 Package in order to align the taxation of energy products with EU energy and climate policies and end outdated tax exemptions and incentives for the use of fossil fuels.
The revision of the ETD is an advantage for the railway sector, as ending tax exemptions for polluting fuels would accelerate the modal shift. This way it levels the playing field between the different modes of transport, and encourage consumers to choose clean alternatives such as rail transport.
Is your business Fit for 55?
The Fit for 55 Package will shape the legislative landscape for the upcoming decade. More details you can find in our FREE whitepaper. The CO2 emission standards might radically impact your day-to-day business operations.
What can you do now?
- Keep informed on the developments
- Reduce your CO2 emissions by planning and driving more efficient
Consider working with WSD Capacity to align your transport needs. We can help you to become as efficient as possible for now and will be able to help you with CO2 compensation going forward.