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Sector Briefing: Climate Change and the UK Transport Sector
01 August 2005
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Key Findings
- Road transport is responsible for 26% of UK carbon dioxide emissions.
- Carbon dioxide emissions account for 75% of the environmental damage from pollution caused by operating the UK road sector.
- Heavy Goods Vehicles (HGVs) fuel taxes are roughly equivalent to their social costs (emissions, noise and accidents). External congestion costs for HGVs are about twice as high as the damage cost of all HGV emissions.
- Competitive concerns limit scope for further fuel tax increases as a means of reducing carbon dioxide emissions.
- The best environmental outcome would be achieved by road user charges combining with fuel taxes rather than replacing them.
- Has the Lorry Road User Charge been scrapped because of cost, complexity and climate change concerns?
Extract
Trucost has estimated the total carbon dioxide damage costs from UK operations for the eleven companies in this report and compared these costs to 2004 EBITDA. These eleven companies account for 5.5% of the carbon emissions produced by road transport in the UK. Comparisons of carbon emissions as a percentage of turnover and EBITDA shows how vulnerable they would be if the environmental damage costs of their carbon dioxide emissions were added to their business costs. In particular the earnings of logistics companies would be significantly reduced. It should be noted that these companies already contribute substantially to the environmental damage costs for which they are responsible through Fuel Duty and Vehicle Excise Duty, an issue which is discussed in greater detail in this report.
Why did Trucost carry out the research?
The transport sector is a significant contributor to carbon dioxide emissions worldwide and globalisation has led to long and fragmented supply chains. Road transport dominates the UK transport sector and is responsible for 26% of UK carbon dioxide emissions. Fuel in the UK is heavily taxed when compared to Europe as a whole. Fuel taxes paid by the UK road transportation sector exceed the environmental damage costs of its carbon dioxide emissions by a factor of 2.6 times. This means that the scope to increase fuel taxes to reflect climate change concerns is limited by the competitive disadvantage that UK operators would face. Trucost’s report examines the environmental impacts of operating road transport in the UK and to what extent the UK and EU governments are dealing with these impacts.
Report image: UK domestic freight transport by mode
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