sectoral economic costs and benefits of ghg mitigation - IPCC

Transport
for air pollution and noise. Impacts on habitants and communities might best be addressed
through changes in transport system design. Nevertheless, fuel taxation is often discussed as a
crude means of reflecting the externalities of road use to drivers for the same reasons (of
convenience) that governments frequently collect road funds through fuel taxes.
This section examines the possible effects of externality adders in fuel taxes. This question was
addressed in the three OECD case studies (Orfeuil, 1995; Morisugi, 1995; DRI, 1996). For
externality adders evaluation the country case studies use a variety of carbon emission costs as
shown in Table 2.
Table 2
Social Costs Associated with CO 2 emissions
FRANCE JAPAN UNITED STATES
$ per tonne of CO 2 5.5 to 19 20(a) 3.2 to 13
Total CO 2 external cost (billion $) 0.6 to 2.5 4 1.8 to 8.6
CO 2 external cost/vehicle-km ($) 0.0015 to 0.006 0.006 0.0008 to 0.003
CO 2 external cost / GDP 0.05% to 0.21% 0.12% 0.03% to 0.15%
(a) secretariat estimate
Source: Michaelis, 1996
Other externality estimates are also available from the same case studies including road
accidents, noise, local air pollution, and congestion. Overall externality estimates for road
transport are: US$ 16-24 billion in France in 1991, rising to $18-29 billion in 2010; US$ 21
billion in Japan in 1991, rising to $24 billion in 2010; and in excess of US$ 118-371 billion in the
United States in 1991. However, these estimates are not evaluated on a comparable basis; any
common action including the use of externality adders would probably depend on developing
comparable externality estimates.
Based on studies, using externality adders in fuel taxes would imply the fuel price increases as
shown below in Table 3, where costs of road provision have also been included. Again, it must
be emphasized that these prices are used for illustration purposes only. Countries considering
raising fuel taxes to reflect the full social costs of transport would need to carry out their own
detailed analysis of those costs, and of the best way to address them.
Table 3
Fuel Price Changes for Full Social Cost Pricing
REGION
Sample country
where subsidies
were estimated
North
America
OECD
Europe
OECD Pacific
Central/
Eastern
Europe
United States France* Japan* Not Estimated Russia fuel
subsidies only
(as previous
section)
Base Full Base Full Base Full Base Full Base Full Cost
Cost
Cost
Cost
Cost
Gasoline 29 53-106 85 103-121 115 148 50 NE 30 30
Diesel 29 53-106 60 103-121 76 148 40 NE 7.5 15
* Externalities estimated in these countries are used for illustrative purposes in modeling transport energy
use in the regions, although the countries are not necessarily representative of others in their regions.
Source: Michaelis, 1996
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