The real story behind the latest EEA emissions figures (part 2)

July 16, 2012
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This blog is part 2 of an analysis of 20 years of CO2 emission trends in transport (1990-2010) as recently published by the European Environment Agency. The first blog focused on overall trends, and on aviation and shipping. In this post Jos Dings, T&E director, looks into individual countries’ performance, in particular when set next to their economic performance, and challenges the common belief that, after all, transport emissions are an almost inevitable by-product of economic growth.

Let’s start with the positive news. Guess which countries in the ‘old’ EU15 have the best (or better least bad) track record in decoupling transport emissions from economic growth ? Answer: UK, Sweden, Germany and Finland. Their transport emissions stayed flat, or almost flat, while their economies grew by 40-55% in 20 years. This implies that their transport emissions per unit of GDP went down by 25-30%. Interestingly, all four countries belong to the few remaining ‘triple A’ states in Europe, which counts for something these days. And Germany proves that it can be done while maintaining and developing an industrial base.

Then look at the negatives. There are some countries that saw their transport emissions grow in line or even faster than their GDP. Portugal tops this list, with 85% more transport emissions and only 55% higher GDP. Then follow Luxembourg, Austria, Greece and Spain, where emissions rose more or less in line with GDP.

Essentially these ‘bad’ countries fall in two groups: the first group is Luxembourg and Austria: their emissions primarily went up more than GDP because of huge increases in so-called ‘fuel tourism’. They keep their diesel tax levels below that of the countries around them, seducing foreign trucks to fill up at their petrol stations.

Luxembourg is the living example of why Europe needs an energy tax directive; it has consistently set its diesel tax right on the required EU minimum, attracting huge amounts of trucks and giving it Europe’s, and maybe the world’s, largest petrol stations. Its diesel sales per head are eight times those of its neighbours. The average Luxembourger, already the richest EU citizen, steals €1,400 A YEAR from other EU members States in excess tax revenue from diesel sales to foreigners, first and foremost trucks that can travel 3,000 km on a single tank.

This is unfair and arguably morally repugnant at a time of grave budgetary concern in many EU countries – not to mention that Jean-Claude Juncker as head of the Eurogroup of EU Finance Ministers tasked with helping restore fiscal health in the EU.

Even worse, Luxembourg’s behaviour acts as a brake on Germany, France, Belgium and the Netherlands’ tax policies as it prevents these countries from raising fuel taxes. Most people won’t shed any tears over this, but the truth is that fuel taxes are economically and environmentally about the best tools available to fix budget deficits. I don’t understand why Luxembourg’s neighbours keep tolerating this behaviour.

To its credit the European Commission is highly critical of Luxembourg’s taxation practices in its ‘country-specific recommendations’.

In this respect, the energy tax directive, amongst others, raises minimum levels of diesel tax; this only affects the ‘fuel tax havens’ and makes life for the others (including notoriously reluctant ones like the UK!) a lot easier. Going for it is a no-brainer.

The second group is Portugal, Spain and Greece. They are all in deep economic trouble because of too much debt, held by governments, banks, or both. Part of this debt comes from overinvestment in transport infrastructure, made in a belief that the more transport would be facilitated and generated, the better it would be. In Portugal, for example, the Government and the road infrastructure agency are still trying to find ways to reduce an accumulated debt of €14.5bn from PPP projects gone bad (check page 22).

What lessons can we draw from this ? That it is utter nonsense to claim that transport (emissions) growth is an unavoidable by-product of economic growth, or that trying to curb it would harm the economy.

And conversely: that trying to create economic growth by massive transport investment can get you in big economic trouble, and surely saddles you with massive CO2 transport emissions and oil import bills.

You see, even the driest statistics in transport emissions tell their own stories, and teach their own specific lessons. If only Europe’s policy makers learned them.

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