Environmental pollution and a European tradable transportation rights system

Abstract

Following the Kyoto Protocol, the European Union has accepted to reduce its greenhouse gas emissions by 8% compared to 1990 by the years 2008-2012. Recently, European parliament has decided to set up. an emissions rights trading system for energy intensive sectors within the European Union by 2005. This program may later be extended to other areas such as transport, which is the fastest growing producer of greenhouse gases. The Kyoto Protocol provides different flexible implementation mechanisms. Out of four different schemes of tradable emissions rights, the cap-and-trade system seems most suitable for the transport sector because it provides better incentives for technological innovation. This still leaves several threshold, design and implementation issues to be settled. It is reasoned why a tradable transport rights (TTR) system on a European scale, monitored upstream by a European agency that distributes tradable fuel permits of limited validity for free to citizens of three different age categories using smart card technology, should be preferred. The analysis further shows that a TTR program is ecologically effective, socially fair and both statically and dynamically efficient. To predict the precise impact of TTR, more quantitative research is needed.