Steering the Transportation Sector Toward a Low-Emission Future
Addressing climate change requires policy action, innovation and cooperation.
The world is hurtling into climate change. From rising sea levels to extreme droughts and floods, people’s lives and livelihoods are already being affected. In the APEC region alone, climate change is estimated to bring an additional 350,000 deaths and economic losses of about 7.3 percent of GDP per year by 2100 under business-as-usual.
Urgent steps are needed to slow down climate change. In their 2022 declaration in Bangkok, APEC leaders recognized that “more intensive efforts are needed to address today’s challenges, including climate change, extreme weather and natural disasters, food security, and sustainable energy transitions that reduce greenhouse gas emissions….”
Efforts to reduce greenhouse gas (GHG) emissions will involve the transportation sector. Responsible for one-fifth of the world’s total carbon dioxide emissions, effective policy intervention is needed to spur innovations and practical solutions that can reduce GHG emissions quickly and effectively.
Key transportation policy interventions share some common threads. For one, there is a need to promote and, where applicable, mandate emissions reductions and the use of sustainable fuels while funding research and development for low-emission alternatives. Working with the private sector and taking a holistic approach to transportation apply across the board. But there are also mode-specific policies to consider.
Land transportation without the tailpipe. Contributing 77 percent of transport emissions globally in 2021, making headway in decarbonizing land transportation is crucial to reduce overall carbon emissions.
On the supply side, vehicle electrification is the fastest and most efficient way to reduce the carbon footprint of land transportation. Governments need to adopt policies to align the signals in the electric vehicle (EV) market. For producers, governments can implement vehicle supply regulations, which can be done by setting fuel performance mandates. For consumers, governments can provide purchase and usage incentives, such as rewarding consumers with free or discounted parking among other benefits. Providing convenience through easy access to public charging stations and information campaigns can also influence consumers’ decision to buy EVs.
These policies are working: In 2021, sales of EVs as a share of all vehicles climbed from just 1 percent in 2016 to almost 18 percent in China and Europe, and up to 5 percent in the United States.
On the demand side, policymakers should improve the coverage and quality of public transportation as its usage is associated with 45 percent lower CO2 emissions relative to privately owned vehicles. This can be paired with promoting carpooling infrastructure and encouraging walking and cycling through well-designed urban spaces, with the goal of dampening demand for private vehicles on the road.
Low-emission shipping from port to starboard. Support for research and development is needed to explore a greener future for shipping, including the use of sustainable fuels, electric-powered ships and even the return of wind power—this time with blades rather than sails—to carry ships across oceans. For now, however, adoption of sustainable fuels is still the most feasible until greener technologies become available. To help kickstart the adoption of green fuels, governments can support the construction of bunkering infrastructure, which allows ships to refill their fuel at port, through policies such as co-investment in assets, pilot programs and regulation.
It is also important to recognize that green shipping starts on land. One strategy calls for green port systems, homing in on improvements in energy efficiency and sustainable practices at ports. These include reducing port fees for ships satisfying environmental standards, incorporating environmental standards into procurement processes, and establishing emission trading schemes. Incentives for reducing ship speeds have also been explored by some ports to reduce GHG emissions.
Another area to consider is the establishment of green shipping corridors, which have gained traction in Chile, Korea and the United States. Green shipping corridors involve a holistic view of sustainable practices from port A to port B and the route connecting them. This helps coordinate and complement sustainability efforts across shipping lanes and incentivizes investment in sustainable practice, while reducing GHG emissions and pollution.
Cruising in low-carbon skies. Aviation faces peculiar constraints in testing newer, greener technologies: the risks are different and technology failure has serious implications in the air. Hence, while greener technologies are still in development, aviation will need to rely on mitigation, efficiency and market correction to reduce its GHG emissions.
Mitigation involves ramping up the use of sustainable, clean fuels in aviation whenever applicable. Subsidies for sustainable fuel use combined with setting a minimum percentage of sustainable fuels in a flight’s fuel mix can bring aviation to a cleaner cruising altitude.
Lowering aviation emissions can also be done through efficiency on the tarmac, for example by optimizing airport management through improvements in ground operations or setting industry standards on energy efficiency of aircrafts in operation. Another approach is to modernize the air traffic management system, which can help determine flightpaths that minimize detours and optimize aircraft descents.
Finally, correcting market signals by making emissions more expensive can incentivize sustainable practices while reducing demand for carbon-intensive options. Carbon pricing and taxes are one way some APEC members have used to realign signals in the sustainable aviation fuel market. Carbon offsets—if monitored transparently and effectively to avoid greenwashing—can also provide an opportunity for airlines to reduce emissions while supporting climate change mitigation.
Shifting gears for a just transition. The journey to low-emission transportation will inevitably be disruptive. As the region treads new ground, people must remain at the heart of climate change policies. Policy solutions for low-emission transportation should consider and mitigate its impacts on workers, poorer households and vulnerable populations.
Addressing climate change will need to happen equitably. Social protection, skills development and active labor market policies will need to be in place. Knock-on impacts on inflation and access to mobility, especially for poorer households and workers, will need to be mitigated. Financing the just transition will need to be explored.
Until warp-speed space travel becomes available, humanity has no alternative to planet Earth. Climate change needs to stall, and low-emission transportation policies can help apply the brakes.
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Emmanuel A. San Andres is a senior analyst at the APEC Policy Support Unit.
For more on this topic, download Policy Paths toward Low-Emission Multi-modal Transportation in APEC.