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2.1 Introduction

Throughout the course of history, the economic growth of our world has been closely tied to efficient methods of transportation. The transportation sector involves the movement of people and goods by cars, trucks, ships, airplanes, trains, and other vehicles. Many of the vehicles used are equipped with internal combustion engines that combust petroleum-based products. Even electric vehicles require energy that may be produced by fossil fuels or even coal. It is well known that fossil fuels contain a high percentage of hydrocarbons and the burning of these fuels produces carbon dioxide (CO2), which is a greenhouse gas (GHG). Thus, as freight and passenger traffic constantly continues to grow, a major challenge is how to ensure the long-term sustainability of such growth. More important, and as Chap. 1 of this book has shown, policy documents such as the EU 2011 White Paper on Transport stipulate ambitious 'decarbonization' goals in reducing transport-related emissions by 60 % by 2050 as compared to 1990 levels. Challenges such as these are playing an increasingly important part in the policy debate on trade and development, environmental sustainability and energy security. If left unchecked, unsustainable patterns are likely to prevail, undermining the progress that already has been made on sustainable development and growth.

As discussed in the Preface of this book, the traditional analysis of transportation logistics problems has been in terms of cost-benefit, economic or other optimization criteria, which by and large either ignore environmental issues, or consider them of secondary importance (See Psaraftis and Kontovas, 2010). Green transportation logistics tries to bring the environmental dimension into the problem, by analyzing various trade-offs and exploring 'win-win' policies and solutions. The main purpose of this chapter is to introduce some basic concepts on transportation emissions that are relevant for the scope of this book. To that effect, we start by presenting the basics of estimating emissions from transportation activities, the current statistics and future trends, as well as the total impact of air emissions and its contribution to climate change. We next present the basics of environmental policy measures. In that context, we describe a way to measure the cost-effectiveness of various measures through the so-called Marginal Abatement Cost (MAC). Finally we deal with the topic of the energy efficiency gap and examines why governments and companies may forego cost-effective investments in energy efficiency even though they could significantly reduce energy consumption at a lower cost.

At a macro level, and according to the United Nations Framework Conference on Climate Change (UNFCCC), CO2 contributes to global warming which is defined as an increase in the average temperature of the Earth's near-surface air and oceans (UNFCC, 1997). There is a growing concern that the Earth's atmospheric composition is being altered by human activities which can lead to climate change. This view has led the UNFCCC to adopt the objective to achieve stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system (see Article 2 of the UNFCCC (UNFCCC, 1997)). The stabilization of concentrations of atmospheric CO2 will require significant reductions in global emissions of CO2 in the future, but the resultant temperature from stabilizing these concentrations at various levels (e.g., 450, 550 ppm, etc.) depends on many factors. Models estimate that the global mean surface temperature arising from a doubling of CO2 concentrations is between 2 and 4.5 oC (IPCC, 2007). Due to the many uncertainties involved with climate change, the Intergovernmental Panel on Climate Change (IPCC), a scientific intergovernmental body, was tasked to evaluate the risk of climate change caused by human activity. The reports produced by IPCC made it clear that differing viewpoints within the scientific community do exist.

The so-called Kyoto Protocol is an international treaty which extends the 1992

UNFCCC that commits State Parties to reduce greenhouse gases emissions, based on the premise that (a) global warming exists and (b) man-made CO2 emissions have caused it. The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005. Currently there are 191 StatesParties to the Protocol. The Protocol's first commitment period started in 2008 and ended in 2012. Negotiations are currently under way to agree on a post-Kyoto legal framework. In accordance with Articles 4 and 12 of the Climate Change Convention, and the relevant decisions of the Conference of the Parties, countries that are Parties to the Convention submit national GHG inventories to the Climate Change secretariat. Emissions from international aviation and maritime transportation (also known as international bunker fuel emissions) should be calculated as part of the national GHG inventories of the Parties, but should be excluded from national totals and reported separately.

Thus, emissions from bunker fuels are not subject to the limitation and reduction commitments under the Convention and the Kyoto Protocol. Emissions from aviation and marine 'bunker' fuels form a significant part of the global climate problem—almost 10 %. The Kyoto Protocol assigned responsibility for reducing bunker greenhouse gas emissions to developed (the so-called 'Annex I') countries working through the International Civil Aviation Organization (ICAO) and International Maritime Organization (IMO), both United Nations agencies.

The IPCC is the most authoritative international body on climate science and IPCC's Assessment Reports provide a comprehensive summary of climate change. The IPCC's latest report—the Fifth Assessment Report (AR5)—is the most comprehensive assessment of climate change undertaken. The third installment of the AR5 is Climate Change 2014: Mitigation of Climate Change by Working Group III (WG III) and Chap. 8 presents a comprehensive assessment of transportation. According to this report, reducing global transport greenhouse gas (GHG) emissions will be challenging since the continuing growth in passenger and freight activity could outweigh all mitigation measures unless transport emissions can be strongly decoupled from GDP growth (IPCC, 2014).

Fig. 2.1 Typical ranges of direct CO2 emissions per passenger-kilometer and per tonne-kilometer for freight, for the main transportation modes when fuelled by fossil fuels. Source: IPCC (2014)

According to the statistics presented, the transportation sector produced 7.0 gigatonnes (Gt) of carbon dioxide equivalent[1] (CO2eq) of direct GHG emissions (including non-CO2 gases) in 2010 and hence was responsible for approximately 23 % of total energy-related CO2 emissions. The report notes that there has been a growth in emissions although there was consensus among the experts that more efficient vehicles are being used and despite relevant policies being adopted. However, direct vehicle CO2 emissions per kilometer vary widely for each mode, see Fig. 2.1.

Readers may recall the truism you can't control what you can't measure. Thus, estimating CO2 emissions (but also other types of emissions) has been very important recently partly because countries that are Parties to the Climate Change Convention must submit national GHG inventories to the Climate Change secretariat. In addition, industrial sectors, businesses and also individuals are now more sensitive to the environmental footprint of their activities. However, estimating emissions is not a trivial task, as Sect. 2.2.1 of this chapter will elaborate. A fortiori, it is much more difficult to estimate future emissions, where there is significant uncertainty for the future use of energy. Many scenarios for future GHG emissions are based on assumptions on global development in the IPCC Special Report on Emissions Scenario (SRES) storylines.

The transportation sector also emits non-CO2 pollutants that have important effects on air quality, climate, and public health. These include methane (CH4), which is another GHG, volatile organic compounds (VOCs), nitrogen oxides (NOx), sulphur dioxide (SO2), carbon monoxide (CO), particulate matter (PM), black carbon, and non-absorbing aerosols (Ubbels, Rietveld, & Peeters, 2002). Beyond any doubt, air pollutants such as SOx, NOx, and PM negatively affect the environment and human health. There are concerns that exposure to high concentrations of SO2 is associated with effects on breathing, respiratory illness, alterations in pulmonary defenses, and aggravation of existing cardiovascular disease. Similarly, nitrogen oxides can irritate the lungs and lower resistance to respiratory infections. In the air, it is a potentially significant contributor to a number of environmental effects such as acid rain and eutrophication in waters. Actually, both SO2 and NOX, which are not GHGs, are the major precursors to acid rain, which is associated with the acidification of lakes and streams, accelerated corrosion of buildings and monuments, and reduced visibility. In addition, these emissions are also responsible for Climate Change, however, their contribution is much more uncertain and complicated (see Sect. 2.2.4 for more details).

One could go into deeper details on every one of the uncertainties described above or even into more generic ones. For example, Schelling (2007) poses some questions that expose the relevant uncertainties. How much carbon dioxide may join the atmosphere in a 'business as usual' scenario? How much average warming is to be expected from a specific increase in the concentration of GHGs? How will this average warming translate into climate change and what the effects will be in 50 or 150 years from now? These are not very easy questions to answer.

From the environmental economics' point of view, climate change is the

greatest and widest-ranging market failure ever seen, presenting a unique challenge for economics (Stern, 2006). To use international shipping as an example, and based on the principles of equal treatment and level playing field, developed countries are urging all Member-States to quickly adopt emission reduction regulation, noting however that most of the world tonnage is registered in non-Annex I countries. On the other hand, many developing countries including China, Brazil, India and others are totally against the application of such regulations to these countries. These countries argue that the 'Common But Differentiated Responsibilities' (CBDR) principle also discussed in the Kyoto Protocol should be applied. According to CBDR, developing countries should not be subject to the same emissions reduction goals as developed countries, on the ground of their economic development. This is in line with Stiglitz (2006) which states that the biggest problem with Kyoto is to bring the developing countries within the fold.

A number of measures, operational, technical and others have been stipulated to curb emissions. The IPCC report (IPCC, 2014) concludes that direct GHG emissions from passenger and freight transportation can be reduced by, inter alia:

(a) avoiding journeys where possible by, for example, sourcing localized products, restructuring freight logistics systems, and utilizing advanced information and communication technologies (ICT);

(b) encouraging modal shift to lower-carbon transportation systems, also by increasing investment in public transportation

(c) infrastructure, and modifying roads, airports, ports, and railways to become more attractive for users and minimize travel time and distance;

(d) lowering energy intensity (that is energy used per cargo kilometer)—by enhancing vehicle and engine performance, using lightweight materials, increasing freight load factors and passenger occupancy rates and deploying new technologies;

(e) reducing carbon intensity of fuels (carbon equivalent emissions per mass of energy used) by substituting oilbased products with sustainable energy sources (e.g. natural gas, bio-methane, biofuels etc.)

The rest of this chapter is structured as follows. Section 2.2 discusses possible ways to estimate emissions, presents emission statistics from transportation activities and its future trends as well as their impact to climate change. Section 2.3 presents the basics of environmental policy measures. Section 2.4 presents an index to measure the cost effectiveness of emission reduction measures and the concept of Marginal Abatement Cost (MAC). In addition, this section explains the reasons why some reduction measures that seem to be cost-effective are not adopted in practice. Finally, Sect. 2.5 concludes this chapter.

  • [1] Carbon dioxide equivalents (CO2 eq) provide a standard of measurement against which the impacts of releasing (or avoiding the release of) different greenhouse gases can be evaluated. According to IPCC (2007) every greenhouse gas (GHG) has a Global Warming Potential (GWP), a measurement of the impact that particular gas has on 'radiative forcing'; that is, the additional heat/energy which is retained in the Earth's ecosystem through the addition of this gas to the atmosphere
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