In its efforts to achieve this goal, the union has mainly focused on improvements in fuel and vehicle technology. An often-criticised approach, it is thought to contribute to the growing gap between test results and actual on-road emissions. When real, improvements in fuel and vehicle efficiency tend to decrease costs and so increase demand, counteracting the positive impact.

As an alternative, many researchers have suggested demand- and supply-side policies, effectively putting a prize on environmental externalities (e.g. emissions).

In a recent study, Benjamin Kickhöfer et al investigate the real-world effects of implementing an optimal pricing scheme in relation to the EU 2020 CO2 reduction targets. By simulating a scenario of the Munich metropolitan area in Germany, the study indicates reaching the EU target would require standard damage cost estimates to be multiplied by a factor of 5, from 70 to 350 EUR per ton.

Benjamin Kickhöfer comments:

“Transport is the only sector where emissions keep increasing. If we take the 2 °C global temperature target seriously, as we should, then transport emissions must go down – there is no way around it. But what our simulation shows is that for that to happen, the cost of polluting must go up very significantly. The way forward, of course, is a transition to sustainable transport solutions, for example electric vehicles.”

“Mind the price gap: How optimal emission pricing relates to the EU CO2 reduction targets” is published in the International Journal of Sustainable Transportation. Benjamin Kickhöfer is Director of Simulation and Digital Product Development at Einride. He holds a PhD in simulation and optimization of transport networks from the Technical University of Berlin.