Consumer Heterogeneity, Transport and the Environment

Abstract

While transport is essential for the functioning of the economy of each country, it is also contributing to CO2 emissions and other externalities, like safety risks and noise exposure. According to the Internal Energy Agency, around 23% of global CO2 emissions is related to the transport sector in 2015, making it second largest emitter after the energy sector (IEA, 2015).
The energy sector has long started to stabilize its emissions through the large scale introduction of renewable and clean energy sources. If the transport sector continues to develop as before, this will make this sector perform even worse in terms of its relative emission contribution.
Although top-down emission policies have been successful (for example, regulations regarding particulate filters), the increasing transport related emissions worldwide indicates that there is a need for more action. While regulations and technological innovations may decreased emissions, but not enough to reduce emissions to acceptable levels; behavioural change is also necessary (Bristow et al., 2008; Hickman & Banister, 2007). However, imposing behavioural restrictions may be associated with economic costs. Therefore, the existing dilemma is how to reduce the share of transport in global emissions while minimizing unfavourable economic implications.