A CO2-fund for the transport industry

The case of Norway

Abstract

As part of a joint implementation towards European climate goals, Norway has committed to cutting GHG-emissions by 40 percent in 2030, relative to 1990. The transport sector – which falls outside the scope of the European permit system – makes up over 30 percent of national GHG-emissions, with heavy road transport being responsible for a large part of land-based emissions. Every year, 70 000 trucks emit around 2,5 million tons of CO2, and pay in over 1,2 billion NOK in CO2-duties on fuel.

In a recently published report, the Norwegian Green Tax Committee identifies duties and taxes as the most important tools for achieving emission reductions from transport. In turn, the Confederation of Norwegian Enterprise (NHO) emphasizes the need for both “carrot and stick”. One of the more positive measures that NHO proposes is the establishment of a so-called CO2-fund for the transport industry, modelled after the successful NOx-fund equivalent. In return for committing to greening their fleets, participants in a CO2-fund would pay a lower per litre fuel duty than non-participants. The proceeds from these duties would then be earmarked for subsidies towards the (partial) coverage of the additional investment costs for more environmentally friendly rolling stock, but also towards the construction of required infrastructure (fuelling stations). NHO commissioned the Institute of Transport Economics in Norway (TØI) to evaluate the costs and potential emission reductions of such a CO2-fund. A tentative summary of the study is presented in this abstract.