‘Europe will apply its emissions trading scheme to buildings and transport’, European Commission President Ursula von der Leyen told a summit of world leaders on 22 April 2021. Indeed, the European Commission announced earlier, in the European Green Deal of end 2019, that it considered to apply emission trading to road transport.

This report studies the conditions of the potential inclusion of road transport into the European Emissions Trading System, the EU ETS.

• We first describe the European climate context and the role of the road transport sector. We give a detailed description of the functioning of the EU ETS and provide an overview of the most important existing policy instruments addressing the CO2 emissions of road transport.
• In the second part, we study how emission trading for road transport can be set up: we look at the main system options and the interactions with the existing policy instruments.
• In the third and last past of the study we analyse the impact of the most relevant policy options onCO2 emissions, abatement costs and on the incentives for technological
  innovation. Finally, the economic and social impact on road transport users, fuel suppliers, the other EU ETS sectors and governments are analysed.

Throughout this study the focus is on CO2 reduction. While road transport has other dimensions and generates other externalities, this focus permits to get a clear picture of this single objective and the policies to reach it. Moreover, we focus on the tank-to-wheel emissions. These are the direct tailpipe emissions of road transport.

Download the study here