Fuelling emissions

Decoupling the Environmental Impacts of Transport from Economic Growth
OECD Observer

Transport is the main cause of carbon dioxide emissions, ahead of power generation or industry. While aviation accounts for 14% of transport-based CO2 emissions in the EU, roads have a larger effect. In OECD countries, road transport accounts for over 80% of all transport-related energy consumption, for most of the accidents and the majority of air pollutant emissions, noise and habitat degradation.

But does the negative impact of transport on the environment have to be in step with economic growth? No, says the OECD in a recent report, Decoupling the Environmental Impacts of Transport from Economic Growth. For instance, since 1980, the US experienced a relative “decoupling” of transport from GDP growth: between 1970 and 2000, GDP increased by 160% whereas passenger transport rose more slowly, by 120%. Can such decoupling be improved further? Yes, says the OECD report, if we “get the prices right”. Some level of decoupling is already happening in the transport sector of many OECD countries for certain emissions, such as sulphur dioxide and nitrous oxide, but not for CO2 particularly where road transport or aviation is concerned.

Still, governments are trying. Consider China, which is on a fast track to becoming both one of the car capitals and pollution capitals of the world. In an attempt to decouple economic growth from environmental damage, central planners have mandated some of the world’s toughest fuel-efficiency standards. China has also become one of the largest markets for alternative-fuel vehicles. In preparation for the 2008 Olympic Games, Beijing officials plan to convert their entire bus fleet of nearly 120,000 vehicles to run on compressed natural gas.

Shifting to environmentally-friendly modes of transport is good practice, though Decoupling the Environmental Impacts of Transport from Economic Growth would also urge such efficient use of charges, fees, taxes and other economic instruments as well as regulatory measures. Road pricing, for instance, has been shown to encourage shifts in transport modes, journey destinations and even business and home location.

The report states that highway tolls tend to be more price-sensitive if there is a parallel free roadway, while driving is less price-sensitive in automobile-dependent areas where transport alternatives are difficult to use. Furthermore, studies suggest that fuel price changes have a significant negative effect on car fuel demand, since a 10% increase in fuel price results in a 7% reduction in demand. On the flipside, an increase of 10% in income will lead to a 10% increase in car ownership, and a 12% increase in both car fuel demand and travel demand.

ISBN 9264027130

©OECD Observer No 258/259, December 2006

Economic data

GDP growth: -9.8% Q2/Q1 2020 2020
Consumer price inflation: 1.3% Sep 2020 annual
Trade (G20): -17.7% exp, -16.7% imp, Q2/Q1 2020
Unemployment: 7.3% Sep 2020
Last update: 10 Nov 2020

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