Transport Subsidies

Cut transport subsidies for environmentally harmful modes in order to facilitate the shift towards rail.

The European transport sector is heavily subsidised by direct transfer as well as by tax reduction. The overall subsidies amount about 270 to 290 bn EUR per year and this is rather a conservative estimate due to the lack of available data.

Traffic causes about 21% of all CO2 emissions in Europe. In spite of this environmental objectives are not significant motivators for most of the subsidies. On the contrary, the most environmentally damaging mode of transport – road traffic – is responsible for almost 93% of all CO2 emission within the transport sector, and receives almost the half of all subsidies (125 bn EUR per year) whereas subsidies for rail are at about 73 bn EUR per year.

“Of the total, road transport receives EUR 125 billion in annual subsidies, most of which takes the form of infrastructure subsidies.

Aviation is subsidised mainly via preferential tax treatment (exemptions from fuel tax and VAT). A total of EUR 27 to 35 billion per year was found.

Rail is subsidised to the sum of EUR 73 billion per year. The financial benefit to the sector is split almost equally between infrastructure subsidies and fare reduction subsidies. Finally, water-borne transport receives EUR 14 to 30 billion.” (EEA 2007) Knowing this it is inevitable to significantly cut the subsidies in road transport and shift it to rail due to the fact the rail is less environmental harmful. This would foster the shift from road to rail and could be a main contributor to reach