sectoral economic costs and benefits of ghg mitigation - IPCC

José R. Moreira
Discussion: Transport Sector GHG Emissions Control and
Developing Country Opportunities
José R. Moreira
1 Introduction
Most of the comprehensive analysis carried out for the transportation sector concludes that
energy consumption is growing worldwide and because people have a finite time budget to spend
in transportation several possible policies have only limited potential to control fuel consumption
and GHG emissions. Some consequences of this framework are (Michaelis, 1996):
• reducing congested traffic probably will induce further demand;
• increase in fuel price (imposed by market or through taxes) has impacts on fuel use
but with an elasticity factor less than one (10% increase in fuel price yields 3.8 to
8.1% reduction on fuel use);
• increase in fuel economy (imposed by technological improvements) has impact on
fuel use but with an elasticity factor less than one (10% increase in fuel economy
yields 7.8 to 4.5% reduction in fuel consumption).
2 Situation in Developed and Developing Countries (DCs)
In the same way energy supply is accepted to be necessary to expand in DCs in order to
guarantee economic growth, further transportation infrastructure is needed. SAR (Climate
Change, 1995) shows a strong relationship between GDP per capita and Transport Energy use
per capita. Nevertheless, at a given level of GDP, energy use can vary by a factor of two. Also it
is shown fuel prices may help to explain this factor of two, but other factors like geographic,
cultural and other factors exist.
Another useful fact pointed out in SAR is the relationship between economic influences and
fiscal measures.
Roads in most countries are built and maintained by government and available for anyone. In
principle, the costs of road provision are recovered through fuel or vehicle taxes in some
countries, while in others taxes are insufficient to cover the costs (see Table 1). In USA road
users pay only 60% of infrastructure costs through taxes and fees (Mackenzie et al, 1992). In
Europe road users pay through taxes and fees, the full cost of roads, considering that 90% of total
investment in road transport is due to vehicle purchases (and taxes on its use is 10% of the car
value).
In DCs, where road infrastructure must be enlarged, magnitude of fiscal measures to reimburse
government expenditures are poorly reported. In Brazil, for example, annual automobiles and
light commercial vehicles sales are around 1.4 million units (Anuário, 1999) at an average cost of
US$ 9,000/unit. This yields an annual sales revenue of US$ 12.6 billion/yr. In car sales, a tax of
18% is charged yielding US$ 2.3 billion/yr. Annual licensing is also required at a value of 3 –
2% of the vehicle costs, which adds another US$ 0.3 billion from the new fleet and more from
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