MIT: Emissions Trading For Transport = EU’s Cheapest Means Of Reducing Transport Emissions

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Rather than adopting an approach similar to the corporate average fuel economy (CAFE) standard in the United States, the European Union could achieve similar carbon dioxide emissions reductions simply by extending the existing emissions trading system to encompass transportation (in addition to the electricity generation and energy-intensive industries it currently covers), according to a new study from MIT and its research partners.


Using such an approach would be far cheaper (as far as costs to the economy) than utilizing something similar to the CAFE standard, the researchers involved argue.

So how much is “far cheaper” exactly? As much as €63 billion, according to study lead author Sergey Paltsev — a deputy director at MIT’s Joint Program on the Science and Policy of Global Change, and senior research scientist at the MIT Energy Initiative.

“There are many ways to do policies” with regard to reducing greenhouse gas emissions, Paltsev commented, “and sometimes political reality doesn’t allow you to do things the best way.”

Though, with the European Union now supposedly committed to reducing its greenhouse gas emissions 40% by 2030 (as per the Paris climate talk agreement), the expansion of the current emissions trading system may be politically possible.

Unfortunately, as noted by Paltsev, the current emissions trading system in Europe has not worked well — owing to the low price of carbon in the scheme and to the fact that it doesn’t cover a wide enough portion of the economy that’s responsible for emissions.

Paltsev contends that the system can be salvaged, saying that “this is a great opportunity to fix it.”

The press release provides more:

“He points out that because of high fuel taxes and the resulting high cost of gasoline in Europe, the existing fleet of passenger cars there is already more efficient than the US fleet, so implementing stringent fuel efficiency standards would be more costly for Europe. …

“And the emissions trading system is already established in the EU, he says, even though in its present form the system is flawed because of over-allocation of emission permits and interaction with renewable energy requirements. …

“The team used a computer model developed at the Joint Program that encompasses the scenarios’ interactive effects on all aspects of the economy, rather than just the transportation sector as most analyses do. For example, the interactive model includes secondary effects such as how manufacturing or service industries may respond to policy changes that affect transportation costs, which can in turn influence the cost of goods. Using this model, the study found that using the emissions trading system instead of a mileage standard could save between €24 and €63 billion in 2025.”

Paltsev noted: “I’m an economist, and if I see €63 billion lying on the floor, I say pick it up!”

The study findings have apparently already been presented to European Union officials in Brussels, and the initial response was reportedly “very receptive, and that’s a good sign.”

The research was detailed in a paper published in the journal Transportation.

Photo by Zachary Shahan for CleanTechnica | EV Obsession | Important Media

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James Ayre

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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