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Sustainable transport

Internalisation of transport external costs

Transport activities give rise to environmental impacts and accidents. In contrast to the benefits, the costs of these effects of transport are generally not borne by the transport users. The internalisation of external costs means making such effects part of the decision-making process of transport users. This handbook outlines a model for the internalisation of external costs which will serve as a basis for future calculations of Infrastructure charges.

Update of the Handbook on external costs of transport (January 2014)

This new 2014 Handbook on external costs of transport continues to present the state of the art and best practice on external cost estimation. In comparison to the 2008 Handbook, it takes into account new developments and progress in the following fields:

  • Large new databases on noise, accidents and emission factors,
  • New and updated models,
  • Updated estimates of important input parameters,
  • Research identifying additional health effects
  • Case studies and marginal cost calculations.

The 2014 Handbook also integrates infrastructure costs – previously tackled in a separate report –and provides updated and more detailed country and area specific estimates of marginal external cost estimates."

Handbook with estimates of external costs in the transport sector - February 2008

The European Commission released a handbook with estimates of external costs in the transport sector pdf - 3 MB [3 MB] . The handbook, jointly prepared by several transport research institutes, summarises the state of the art as regards the valuation of external costs. The Commission intends has make use of this handbook to prepare a communication on a strategy to internalise the external costs for all modes of transport that was adopted in July 2008 and a proposal to revise the directive on the charging of heavy goods vehicles.

Disclaimer: this handbook has been carried out for the Directorate-General for Energy and Transport in the European Commission and expresses the opinion of the organisation undertaking the study. These views have not been adopted or in any way approved by the European Commission and should not be relied upon as a statement of the European Commission's or the Transport and Energy DG's views.

Internalisation of external costs strategy

In 2006, the European Parliament asked the Commission to present "a generally applicable, transparent and comprehensible model for the assessment of all external costs to serve as the basis for future calculations of infrastructure charges". Furthermore, “this model shall be accompanied by an impact analysis of the internalisation of external costs for all modes of transport and a strategy for a stepwise implementation of the model for all modes of transport". This request was included in the Directive on the charging of Heavy Goods Vehicles in the EU ("Eurovignette" Directive).

Work has been organised according to the following lines:

  • First of all , it is crucial to be able to estimate external costs. By definition, external costs are not borne by those who create them. But, in order to get an idea of the magnitude of these costs, it is important to assess their impact and to monetise it. This work has led to a Handbook on the estimation of external costs in the transport sector. 

  • Second, a broad Internet consultation has been carried out. The objective of the consultation was to get a feedback on the general principle of internalisation and on the various policy options. The consultation ended in December 2007 and the Commission has presented its main findings at a high level stakeholder conference on 31 January 2008.

  • Third, the Commission services have worked on an impact assessment on the internalisation of external costs. On the basis of the IMPACT study and other sources, tests are being carried out on different options to internalise these external costs and analysing their impact on the economy, on the environment and on society at large.

  • Fourth, the Commission services has prepared a Communication adpted in July 2008 (Greening transport package) which provides a general framework of reference for the internalisation of external costs in the transport sector.