New information on the effectiveness of measures to reduce emissions from transport

The impact assessments commissioned by the Ministry of Transport and Communications on the effectiveness of measures to reduce emissions from transport, and their costs to the state, have been completed. The impact assessments are used in the preparation of a roadmap for fossil-free transport and in the related knowledge-based decision-making.

A total of 15 measures have been assessed. Some measures have also been assessed on the basis of studies completed previously. The aim of the impact assessment has been to obtain information on how concrete measures can be taken to reduce emissions in a cost-effective, socially and regionally fair way.

In addition, Aalto University studied the way in which fuel consumption and emissions specific to household-dwelling units are linked, for instance, to the income level and place of residence, and how emissions from passenger cars are generated in Finland. Finland's unique register data have made it possible to obtain information on passenger car emissions that is new even internationally.

The impact assessments show that the Government's goal of halving transport emissions cannot be achieved without many different measures. Achieving these goals requires measures to replace fossil fuels in transport and promote the renewal of the car fleet. In addition, the energy efficiency of the transport system needs to be improved. It will not be possible to attain the goals without changing the pricing of fossil fuels, for which emissions trading in road transport and fuel taxation are the most effective means. 

The impact assessments have been prepared on the basis of the baseline forecast of greenhouse gas emissions from transport, published in spring 2020. According to a forecast drawn up by the VTT Technical Research Centre of Finland, the measures already implemented will reduce greenhouse gas emissions from transport by a total of about 37 per cent, or about 3.2 million tonnes, by 2030 when compared against 2005. A 50% reduction in transport emissions requires a further reduction of 13 percentage points in CO2 emissions, i.e.an additional 1.55 million tonnes.

The assessments were carried out by VTT, Aalto University, the Finnish Transport and Communications Agency, and permanent experts from the working group Road Map for Fossil-free Transport. 

Key results of VTT's impact assessment

- According to impact assessments, measures to replace fossil fuels would reduce carbon dioxide emissions by around 0.28 megatonnes. The most significant of these measures would be the extension of the scope of the Act on Promoting the Use of Biofuels for Transport to include biogas. Other key measures include subsidies for public charging and refuelling stations and for the charging infrastructure of housing companies.

- By renewing the car fleet, carbon dioxide emissions can be reduced by 0.16 megatonnes. The most effective way to influence the renewal of the car fleet is to impose stricter emission limits on new cars for car manufacturers at EU level. Other means include subsidies for the purchase of electric cars and heavy equipment, as well as changes in car and vehicle taxes.

- Measures to develop the transport system can reduce CO2 emissions by around 0.17 megatonnes. These measures include, for example, the implementation of urban transport system plans and the realisation of an investment programme for walking and cycling, as well as public transport subsidies. The effectiveness of congestion charges may be high at the regional level but slight at the national level.

- These measures will achieve a maximum of 40 per cent of the emission reduction target.

Aalto University's report on how the pricing of carbon included in fuel affects income distribution

In the autumn of 2019, researchers from Aalto Economic Institute at Aalto University proposed that a national transport emissions trading system, based on marketing authorisations, be created in Finland in order to attain the targets set for reducing transport emissions. During the current year, the researchers have examined data on how emissions from private cars are generated in Finland. The aim of this work is to examine personal and vehicle data at individual level in order to understand how the burden caused by the current fuel carbon dioxide tax is distributed among population groups, as well as to determine how consumers could be compensated for the costs of the emissions trading system. Findings from empirical work:

- Emissions from motoring will increase, but the carbon tax will account for a smaller proportion of income as income rises. However, for most of the income distribution, the tax accounts for less than one per cent of income. As a result, the state can compensate the majority of low-income households for the loss of income caused by the emissions trading system with a relatively small share of the emissions trading revenues.

- There are differences in emissions between urban-rural region types. For low income, the differences are small when households with cars are compared. At the upper end of the income distribution, driving in sparsely populated areas is clearly more common than in densely populated areas.

- The differences in emissions are mainly explained by the kilometres driven. In comparison, the impact of the technology used, for example, is slight.

- In Finland, about 25 per cent of cars in private use produce 50 per cent of all emissions from private cars.

What next?

The report of researchers from Aalto Economic Institute at Aalto University will be published in the week starting on 19 October. The report includes a theoretical and empirical review of the impact of the emissions trading system on income distribution. Based on the impact assessment and the work of the researchers studying fossil-free transport, the Ministry of Transport and Communications will draw up a roadmap for fossil-free transport. This is a plan for halving road transport emissions by 2030. The roadmap will be sent for comments at the end of October. The roadmap focuses on road transport, which accounts for about 94% of domestic transport emissions.

Inquiries

Ministry of Transport and Communications

Director-General Sabina Lindström, tel. +358 40 527 6103, sabina.lindstrom (at) lvm.fi, Twitter @LindstromSabina

Director of Unit Päivi Antikainen, tel. +358 50 382 7101, paivi.antikainen (at) lvm.fi, Twitter @PaiviAntikainen

VTT Technical Research Centre of Finland

Principal Scientist Juhani Laurikko, tel. +358 20 722 5463, juhani.laurikko (at) vtt.fi

Aalto University

Aalto Economic Institute, COO Oskari Nokso-Koivisto, tel. +358 44 045 0732, oskari.nokso-Koivisto (at) aalto.fi, Twitter @oskarinokso