Implementation of internalisation instruments

Generic metadata

Classification

Identification

In the ACs, few market-based instruments are as yet being applied to internalise externalities. Slovenia applies a CO2 tax on motor fuels (diesel and petrol); Prague (Czech Republic) and Cyprus airports apply differentiated landing fees. Cyprus applies a 20 % increase in landing fee for evening and night flights. Road tolls are found in the Czech Republic, Hungary and Slovakia, but these cannot be considered as measures to internalise environmental external costs.

Vehicle registration taxes and annual road taxes are commonly used in the ACs, but are less suitable as internalisation instruments, as they vary only according to the sale price, weight or engine capacity of the vehicle. Estonia, Hungary and Poland also have differentiated import duties for imported cars on the basis of the car's age and the presence or not of a catalytic converter (IEEP, 2001).

In the EU, several countries have introduced certain internalisation instruments, though implementation still faces many barriers. Most instruments concentrate on air pollution in the road sector and noise in the aviation sector. Excise duties on fuel for road transport already internalise CO2 emissions. Few other measures have yet been taken to internalise the costs of CO2 emissions and of rail and road noise. Germany and the UK (London) are taking initiatives to restructure transport taxes and charges to better internalise external costs. The European Commission is developing a framework directive on infrastructure charging.

Differentiation of taxes on leaded and unleaded petrol is a good example of the effective use of market-based instruments to reduce the environmental impact of transport. In the EU this has helped phase out leaded petrol. Five ACs (Bulgaria, Latvia, Poland, Romania and Slovenia) levy higher taxes on leaded than on unleaded petrol. In Hungary, Lithuania and Slovakia leaded petrol is no longer sold. In Turkey, leaded petrol is taxed less than unleaded. Both in the EU and the ACs tax incentives are emerging to promote the use of low or ultra-low sulphur fuels (Poland, Turkey and seven Member States).