ermany: Lena Donat == is om SOTO Kellas part of the efforts of climate Transparency, an international partnership of 14 research orga nisations and NGOs comparing S2t ns. Mis part of series of efforts made by partrers from Argentina, Brazil, Germa: ny, Indonesia, Mexico and South Africa assessing the let: Iransport sector can playin decarbonizing these economies Allthe papers and further information are available at wonw-cimatestransparency.org Climate Transparency This projectis part of the International Climate Initiative (I) The Feceral Ministry for Frvironment, Nature Conservation and Nue- lear Safety (BMU) suppor this initiative based on a decision by the German Bundestag, Supported by BR | Feseniey forthe Environment, Nature Conservation and Nuclear Safety based on a decision of the German Bundestag, Imprint ‘Author: Lena Donat Contributors: Jan Burck, Oldag Caspar, David Ryfisch, Manfred Treber Editing: Joanna Mitchell, Publisher: Germanwatch eW Office Bonn Dr. Werner-Schuste- Haus Kaiserstr 201 53113 Bonn Phone-+48(0}228 / 50 482-0, Fax-8 Office Berlin Stresemannstr 72 10853 Berlin Phone +49 (0}30 /28 88 356-0, Fax-1 Internet: www germanwatch org Email: [email protected] April 2020, Purchase order number: 20-3-04¢ ‘This publication can be downloaded at ‘ven germanwvatch org/en/18573Contents Executive Summary 3 ‘Transport emissions in Germany 7 Past strategies for decarbonising the transport sector 7 any has focussed on making cars cleaner. 8 butnoton shiting to leaner modes 9 Window of opportunity w Obstacles and solutions for a shift tora n Lackof political vsion and long-term strategy u Infrastructure public nance favours road u External costs are not equally intenalised R ‘Supsor for airport operation cass 6 ‘Support for R&D, education and taining favours roed___17 Safety costs ofroad transport areexteralised______ 17 Recommendations eeExecutive Summary In order to become carvon-neutral before 2050, Germany ur gently needs to tackle greenhouse gas emissions from the ‘vanspor sector, Fmissions from this sector are stil ising, and measures currently in piace are still far from putting the sector ‘on track towards its 2030 target (40-42% reduction from 1990 levels) Road transport is responsible for the lion's stare of Germany's transport emissions. However, emission from aviation are also gaining importance. Aviation is by far the mast emission-inter ive means of travel, d'ractly followed by fossil fueloperated ve- hicles. Germany has made some policy attempts to make these transport modes cleaner, though only with limited success. Any ‘efficiency imarovements nave been outweighed by an incre in road and air transport demand, as well as people's preference {for ever-larger cars. Air passenger numbers have tripled since 1991, So far, the gaverament has not made any major attempts rer) ‘Only HEV (above 7.5) on around Yes, ful cost (fixed and marginal {0 reduce the volume of road or air transport. On the contrary, the rapid grovith in car and air passenger rumbers over the last decades would not have been possible without large sums of Public infrastructure investments, tax exemptions, research and development support and other subsidies. Since 198¢, Germany has constructed 247,000km of new roads. In ‘the same time span, only 1,700km of raliway network were cons- ‘ructed or upgraded. The German government currently provides ‘more than twice tre amount of public finance fr road infrastruc- tre (669% of total transport Investment) as for rail infrastructure (2758). In contrast, the UK spends 85% of is transport investment inrallinfastructure, France 48% In addition, Germany's taxation scheme favours road ane air vansport Aviation is exempt from ‘energy taxes, receives 85% of emission allowances under tre EU Emissions Trading Scheme for free, and pays no VAT on interna- sional flights. amongst ather subsidies, road passenger transport cy Yes, for take-off and landing in scheme Access charges | 69a the road network: cars and | costs for passenger anspor. ee eer coaches do not pay Hall-prce for freight arcana cane Petrol/ciesel taxes; dieseltax | Full electricity tax rate forlong- Fuel taxes benefits ancicompany-cartax | distance, reduced rate for No kerosene tax benefits regional rains Renewables surcharge | No(enbyelecttevehiclespay | Yes (on around 30% of ranspor No surcharge) volume) Emissions trading No Yes {for electricity) all allowances | Yes, but 85% of free allowances under auctioning and extra-EU flights not covered Fullrate of 1946 an coach/bus WAT on tickets | sche, and on fuel for cars/HGVs Fullrate of 19% on domestic Reduced rate of 756 fights; NoVAT on cross-boundary (2016-17 average) flights R&D resources 2008-2018 € 3628 milion €423 millon €508millon| Share of transport infrastructure investment 55% 20% 5%Average GHG emissions of different long-distance transport modes ME att Box GA Long.distance coach & Long-distance passenger trains {electity mix ofB long-distance service) does not pay for using infrastructure, and diesel cars nenefitrom reduced energy taxrates. ‘The growing awareness ofthe climate crisis and the rse of polit ‘cal movements such as Fridays for Future, increasing congestion incites and airpollution andthe Dieselgate crisishave started to raise serious doubts around Germany's car- and aviationfocu: sed transport policy. There is growing public support for imiting ‘the use of private fossl-uel vehicles in cities, for taxing and redu cing aviation, as well as for enabling a sh to cleaner transport modes such as walking, cycling ard public transport, Shiting passenger ransportto ral is one key puzzle piece fer de cearbonising Germany's transport system. Rail is already one of ‘the most climate-fiendly modes of anspor, emitting at least seven times less CO, than aviation, and almost five times less than ears \With sufficient investment and politcal suppor, rall can beco- me areal akernative to car and sir travel. These cecisions must be taken today to avoid a locein into a high-carbon transport system for the coming decades. There are clear indications ‘that the German government is starting to pay more attention to improving its ral system, For example, a large inrastructu Source Unwetbordesan 2000 Alors pa Schene 20) re investment package was announced in early 2020, and the value-added tax IVAT) on ral tickets was decreased. However, these measures are stil light touch, considering how public f- arcial support and the taxation scheme have disadvantaged rail against road transport and aviation for decades. There is a real need for ‘ar more radical changes to overcome this discri- ‘mination and te turn ral transport into a cornerstone of Germa- y's future transport system, Due to the COMD-19 cris’, 2020 annual transport emissions are likely to stay well below 2039 levels, However, it can be expec- ted that once the crisis has passed transport demand will qui- lly rotum to pre-crsis levels, with similar GHG emission love's 23s in 2019, The planned economic recovery packages will have longelasting effee:s on the future ecanomic system and GHG emissions in Germany, as the measures will devermine public spending and steer investments for the coming years - also in the trensport sector. This enormous politcal lever can be used smartly for strengthening low-carbon transport modes, thus bringing Germany closer to reaching its transport emission targets. In adcition, che recovery measures also need to be f- nnarced. A stimulus package should go hand in hard with tax reforms, which offers @ good opportunity to revisit harmful sub- sidies currenty ir place,cemanyistacirgaccheerlongtem motity |} xoptaconpeherse ngs loncatonmebily srarzey | stp taunts atvengormodnr ander |" cramp, enenpaninge anopnede onthe } Short term: Stop public investment on new federal niger adualigwa nes ghey he rotson pases Germany provides moretha twice as machinfase |? Pose raivayifastacture, both regional and Seca roves mae an crete coer pees este yr mew. paring evasonce ogated gral SMUCURE .cetargonnvumenenmnony | treane Daenndeeandeostony FINANCE locks us into @ high-carbon transport system for the connections coming cuewtoe perky 1} Revise Federal Transport Infrastructure Plan, and underta- i ke a 15°C check, Include reduction of road passenger and tethiaayonssanmepe rgeinttePan } Plan infrastructure based on coordinated timetable ners lepenerenetnastaseranen rtrd bl susonngote ts aloweees Taxes and charges do not reflect infrastructure costs | first step, abolish € 175 billion cap on alr ticket tax and external costs: average taxes and charges per rail | | evenves arene cs eng ane hae Py aT acces chs ras totheloet cooarr | staal andvealeininscurcons were | Cy mdvcr camprensie ta othe Aviation benefits ram VAT and kerosene taxexem?- | y increase (direct or indirect} CO, price toa level that tions, Car users do not pay for infrestructureuse and | nasa real steering effect, whlle using the revenues for benefit from exemptions for company cars decreasing social and rurav-urban faimess gaps } Relate company cartax benefit to CO, emissions and ited rede an jal pvermes bss te sunvort cnr sronagetrovaton The gvesrea pondesegh mesos RD |B appr eaicaton nd varigintealseaarto nen, _|rundngiarenslerimiion)storal(comite) |" heponsamesnonagectotee wasn TRAINING — | and supports vocational education and training for | Support R&D in the rail sector to improve ral perfor- sarervcosts |umesssnghitonsytan dssduetoauatens | sabycnts ntctecunesiaelpayng fed avoseTransport emissions in Germany Germany has committed to achieving greenhouse gas (GHG) neutrality by mid-century, and to reducing GHG emission by '55%6 by 2030 (measured from 1980 levels. The policy measures currently in place are not suficient for achieving these targets, irrespective of the fact that the targets themselves are nat in line with 15°C. With current efforts, projections say that Get= many would only be able to reduce emissions by 51-52% until 2030', In order to get in line with the 1.5°C temperature lim, Germany would nead ta set more ambitious emission targets. Germany's biggest headachein this respects the transport sec- lor The sector is responsible for almost one fith of tatal natio- ral GHG emissions? Ia all other sectors, GHG emissions have dropped since 1990, Emissions from electricity and industry, for example, were reduced by almost one third. These achie- vements can mainly be attriouted to the breakdown of emis- sion-intensive industry in Eastern Germany after 1990 and the renewable energy boom in the electricity sector. In contrast, the transport sector currently still emits 163 Mt CO,e/year (2015), the same level asin 1380, ‘The government has set a target “or the transpor sector of cutting emissions to a level of 95-88 Mt CO,e by 2080, This is equivalent to 2 40-82% reduction frorn 1990 levels. Howes ver is clear that the measures currently in place will not get Germany anywhere near that target. Recent studies estimate thal current policies will reduce transport emissions down to 125-128 MLCO,e~ this would resutin an emission gapof atleast 27MeCO,ein 20304 Greenhouse gas emissions in Germany by sector 400 Meare OB gg isisny Buicings ae vaicutre Cbygianeant XQ rewron Soure:Unuelivedesam 000)Due to the COVID-19 criss, 2020 annual transport emissions are Tialy to stay well below 2019 levels, Transport demand across all modes has draped to a minimum since the star: of the er 5, However, it can be expected that this will only be a tempo- rary phenomenon, Transgort demand will quickly return to pre ‘crisis lovels, and - i the government does not support significant structural changes - this will result in GHG emission ‘eves to 2019, Germany has already approved a € 750 billion emergency aid package, and further measures are expected for an econo: mic recovery programme afer the crisis. The aid now planned wilhhave long-lasting effects on the future economic system and [GHG emissions in Germany, as the measures will determine pub- lic spending and steer investments for the coming years- also in the transport sector. This enormous political lever can be used smartly for strengthe- ning low-carbon transport mades, thus bringing Germary closer {0 reaching its transport emission targets. The recavery meas res also need to be financec. A stimulus package thus should go hand in hand with tax reforms, which offers a good opportunity ‘o.evist harmful subsicies currently in place. This paper shows how Germany has favoured road and airtrans- port over rail transport for decades, A shif to ail~ as one of the cleanest transport modes - could bea key contribution to decar- boonising the transport sector. This paper paints out opportuni- ties for creating more favourable policy conditions for rll rans- port, with a focus on long-distance passenger transport. Past strategies for decarbonising the transport sector oad transport (private cars, motorcycles, buses, vans, and ‘wucks) i cucenty responsible forthe lan’ share (975) of ttal transport emissions in Germany, amounting (© 159 Mt €0,¢. In 1800, total emissions were 158 Mt CO,e* Roughy two thirds af road transport emssions ae currently caused by cars.” According to the Federal Environment Agency (Umweltbur dlesamt, UBA), domestic fights curenty only make up 12% (2 Mt CO, of transzort emissions? However, this number has ‘wo serious omissions. Fist, the calculation does not inciude ror-C0, climate impacts of aviation from coatrals and citrus clouds, which would increase the figure for longer ights (star ces exceeding 600 km) by a factor af 2-4 Second, international fights are not counted, ‘2. fights coming from or landing ab- ‘oad, Factoring in the fuel used for these fights (international bbunkar fuels} would adé another 30 Mt CO, to the calculation ~oreven 60-120 MtCO, if nar-CO, impacts are courted. Further. ‘more, the numberof ight passengers boarding or disembarking 2° German airports is growing rapidly. Since 1981, this igre has ‘mote than tripled from 77 millon to 244 milion i 2018, and this ‘tend s expected to continue after the Corona csi Transport emissions by source in 2019 FRiioas YE oumeniavaion CBINEHNE IS ay inland waterway Source Own calelations based an Unwetauneesoms 2020"Germany has focus eaqonma Transport has long bees treated as a Cinderella issue in German imate policies, ln 2000, Germany kick-started the famous Ener siewerde (energy transition) with trong support programmes for renewables inthe poser sector For the transport sector, a volun tery agreement between the car industry and the European Com mission was adopted in 1988, setting 2 voluntary CO, emission tar get of 140 g/km forflets for 2008, It as only after the carindustry failed to meet che target in 2008 ~ zhe average emissions of new cars were measured at 154 g CO,/km!~ that more attention wes given to GHG emissions from anspor: In 2008, the FU adopted! a Directive with binding but not very ambitious, eet targets of130 8 6O,fkm for 2015, Germany/s 2010 Energy Concept aimed to reduce energy use from transport 1056 unti 2020 (comparedito 2005 le ‘els, and spelled out numerous measures supporting the uptake of electric vehicles and biofuels? The 2013 Mobility Strategy set uta vision fr diversifying the fuel mi” king cars cleaner ‘These policieshave resulted in some technologicalimarovements ~ for example, the average CO, emissions of passe-ger cars per Kilometre has dropped by 9% since 1995.!" However, two factors have completely outweighed these positive developments: First, people and goods travel more and for longer distances, usually via road transport. The number of klometres people travel has increased by 37% since 1991." Over the same time period, the aumber of cars registered in Germany increased by 28%, from 362 milion in 2891" to-47.1 million cars in 2019 for £83 milion people’. The government expects that the number of ppassengerilometes (pkm] travelled by car will keep increasing bby 1.2% annually." This development completely outweighs any Passenger transport volume by mode Sum 1981: a75km 1200 1000 3 8 Passenger kilometres 3 YX ssiation & Rail aa aa = peeeee az {NA DEPP LPH PLP PS oP St PS PP ‘Ca rubticroad transport effciongy improvements? sum 2018 1.182 ken ‘BO at i a? tt ae gi gt gh I [ a Gar} Motorised private transport Source Umwebuncesamt 220°Second, people buy heavier cars with higher engine power, which outweighs any technological improvements. The ave- rege engine power of new cars increased from 87 kW in 2008 to 12 KW in 2018 (+2884), and the average weight from 1296 kg to 2515 kg (16% In 2018, SUVs made up almost a third of new ‘ar registrations in Germany.” & SUV emits more than twice as much CO, perkm as an average small car Contrary to expectations, the emissions and efficiency stan dards for vehicies have nat induced 2 real uptake of electric vehicles. EVs still made up less tran 296 of new registrations in 2018. In this regard, China (4.5%) and the US (2.586) have long bypassed Germany. The main reason for the slow uptake are a shart range, a lack of charginginfastructure and high purchase prices. 2029, Germany introduced a bonus of € 6,000 on the purchase of Ev, which has considerably reduced but not elimi nated the price gap. A small electric Volkswagen model i stil 2,500 move expensive than 2 comparable engine-powered model, even alter the borus.™* However, one cannot assume that simply shitting all cars to electric power would solve all problems. Elecvic vehicles are more resource- and energy-intensive to produce than conven: tional cars. A study by Fraunnofer-{Sl estimates that the produc. tion of an EV currently causes 70-130% more CO, emissions ?® Also, electric vehicles are only as clean in operation as the elec: ‘ricity mix, which is not yet fossibfree in Germany, With the cur Aer walking and cycling (which are only an option for short distances), tains are the transport mode with the lowast level ‘of GHG emissions peperson-km. The exact numbers depend, of course, on the fuel mix used for rl transport In Germany, long distance passenger tains ofthe main tain company Deutsche Bahn (08) ae uelledw th 100% renewable lect. In egional transport, some rainsstil operate with dese orother electricity mixes Assuming the average Garman electricity mix, cars emit 45 times, and planes 7 times, as much GHG emissions as long istance trains, Since Deutsche Bahn operstes with 100% rene \wables in long-distance rains, the real factor is even higher” rent electricity mix and high production emissions, an EV needs todrive 150,000 am before having aC, advantage compared to 2 conventional car. With the consumption of 100% solar energy, ‘anc assuming the same production emissions, tis break-even point would be reached after 60,000-80,000km.* Lastly electric vehicles can only make a real cont“bution to decarbonisation ifadditional electricity demand is kept at 3 minimum? fall 47 milion cars in Germany were suddenly replaced by electric ve- hicles, this would increase electricity demand by 20362 Ifthe ‘number of cars and kilometres travelled, vehicle weight and en gine power keep increasing, electricity demand would increase further. Due to their heavy batteries, elect vehicles are area dyheavier than conventional cas, and the current trend is hea ding towards electric SUVs models instead of smaller models. Another problem is the growing demand for minera's used for the production of E¥s, such as lithium, cobalt, copper, or iron, The extraction of these resources causes environmental prob- lems ands often connected to serious human rights wolations, Lithium mining, ‘or example, requires vast amounts of water ‘anc deepens existing water shortages in the production areas, Cobalt is mainly extractedin DR Conga, ofen using child labour. Ifthe complete global car feet simply switched to electric pow= cr, this would increase demand for lithium by almost 3.000%, ‘anc cabalt demand by almost 2,000% These numbers show that simply switching ta electric but not reducing the numoer of private carsis not a sustainable option but not on shifting to cleaner modes ‘These calculations are based on the average utilisation ate (eg 1.49 people per car 276 people in 2 long-distance train) fight emissions are weighted wit a ‘actor of two to take ino account rnon-CO, climate impacts of aviation from contrails and cirrus clouds" Some studies suggest that the factor should be even higher, upto four Long-distance trins also produce less air palition anc are the = cures form of travel. Nitrogen oxide emissions of planes ae25times _ashigh as emissions from trains~ measured er passengerhm, The "isk oinjuryis 137 times as hig driving acarastraveling by tain ™Average GHG emissions of different long-distance transport modes zi X on oe i co GA Longsdistance coach = @ Beeston §| {average German electricity mix) 3 Ey] Q {electricty mixofDB long-distance service) Souice: Umwetbundesam (2920; Alanz pro Selene 2020 Injuries (2009-2018 average) Bai | i Ei emetic cor ail Coach Nitrogen oxide em = elpassengerlometre soue:Umwetbundesan 2920: Alan pro Selene 2020Modal split of passenger transport in Germany 1994 and 2018 Source: 020 am 2000)" Q Rail Since the erm of Germanys allay system in 1894, al passenger transportwolume hasincreased by 4034" However, his mainy mi ros the ovral increase in passenger ransport across mades, The share ofrallin the medal split has oni increased by 3 small margin and now ies at 83% Asacomparson in 1850"alhada share of3/% inthe mda splitof passenger transportin West Germany"? ‘Over the same period, the total length ofthe railway network de- creased from 44,600 km to 38,500 km.” GEER Public road passenger transport x Air aejcar Only around 60% of the network is currently electrified. Compa- red to 87% in 2007, this equa's a progress of only appraximate- ly 704m of raid electrification per year, The government aims to achieve 70% electrification by 2025 ~ this would require around '300 km per year‘? Between 1994 and 2011, the number of 08 ‘employees was cus by 3536, with 117,000 jobs lost Luckily, re- cent developments point in an opposite direction: in 2018, Deut- sche Bahn hired 24,000 new employees."*Window of opportunity kis symptomatic that Germanys transport strategies are largely. lent on avoiding trafic or siting trafic away from road, For deca des, catshave been a powerful symbol o” Germary’s postwar Wirt. schaftswunder (ecoxomic boom), The automotive indust’y, which has specialised on large cars with nigh engine power, hasbenefited {rom quite favourable political circumstances. The government as pampered the industry and protected it fom stricter EU regulat ‘ons. tis thus not surprising that opportunities to shift transport to cleaner modes, such as walking, cycling. public transport and-fist ‘and foremost -ail transport, have long been neglected, ‘The German government's long-standing focus on road and air transport could now exserience a turnaround. The growing awa reness of the climate crisis and the rise of political movements such as Fridays for Future has placed the transport sector under political pressure. Increasing congestion incites anc a'r pollu tion are putting the current car-focused transport policy n ques tion, and the diesel crisishas shaken public confidence in the car industry's ability to find approprate answers to these challenges ‘Shifting passenger transport to rail could be one key puzzle piece for decarbonising Germanys transport system, ‘Germany alms to reduce emissions from the transport sector to 95.88 MICO,e by 2020, In 2018, the sector emitted 167 MtCO,e"* The Ministy for Economy has estimated that a pata shift rom passenger and freight transportto rail could reduce emissions by ismtco, While the current CDU/CSU-SPD goverment stil places much emphasis on road transport, there are clear signs that the go- vvernment is also paying more attention to improving the rail system, According to the 2018 coalition agreement, the go- vernment aims at doubling the numberof railway passengers, inter alia by 1 Introduction ofan integrated regularinterva timetable for Ger mary (Deutschland-Takt) electrifying 7038 ofthe railway network by 2030 2 Increasing rail infrastructure investment 1 Reducing track access charges ‘With the 2018 Climate Package, the government has promised to Introduce a CO, price for transport, reduce the VAT on rail tickets ‘and increase aviation taxes. Within the next ten years, the govern- ‘ment plans to support railways with around € 150 billion For a higher modal split of alin the feeight sector the Governmenthas launched a masterplan for ral freight (Masterplan Schienengi- terverkehe)** However, the announced measures still cemain rather ‘light ‘ouch’ ard do not yet make up for the long-standing discrimina- tion of rail transport. In order to turn ralinto a real alternative to road and air transport, the transport policy mix requires a com plete overhaul Obstacles and solutions for a shift to rail Lack of political vision and long-term strategy Germany is lacking a coherent longeterm mobility strategy that integrates al transport modes andisin ine with the Pars climate targets. Currently, there are many diferent contradicting policy instruments and infrastructure plans in place“T although the Federal Infrastructure Plan gives @ broad idea for infrastructure profes, itmeitner provides a holistic concept for future mobil ‘y, nor guarantees respective financial esources* SOLUTIONS: } Adopta comprehensive low-carbon long-term. mobility strategy, encompassing all transport mades and their synergies.Infrastructure is key forthe functioning, and there‘are the attrac tiveness, of different transport modes. Due to the high capital ‘costs and the long lifetime of transport infrastructure, decisions taken today nave the potential to lock us into a high-carbon transport system. Infrastructure also needs to be maintained: roads and highways constructed today wil locks future funds that could otherwise be used for alternative transport modes. Since 1994, Germany has constructed 247,000 km of new road network, not counting the addition of driving lanes to existing ro ads. In the same petiod, only 1,700 km of railway network were ‘constructed or upgraded. This equals 150 times as much new road km as rail km." The length ofthe total railway network has astructure public finance favours road ‘even decreased, as many railway tracks, especialy for regional ‘ransport, were abandoned ~ 6,100 km have been closed since 1994, which constitutes 1386 of the network. Since the early 1980s, Germany has also opened 10 new airports, The government has supported this development with public finance. Due to the high capital costs of new infrastructure and Infrastructure maintenance, public “nance is crucial for trans- port infrastructure, According to the OECD, Germany currently provides more than twice the amount of public finance for road infrastructure (66% of total ransport investment) as for rail ine frastructure (278). In contrast, the UK spends 85% of transport investment ina infrastructure, France 463% Investment and maintenance spending by transport mode (2016-17 average) Argentina CAS Ld ad Australia Brazil Canada China Germany Indonesia Japan Mexico South Korea Saudi Arabia 2% 4% 6% South Africa 5% Turkey United Kingdom United States 2% 8% 5% 17% Source Overseas Development insttute forthcoming)?In Germany, the main instrument for stesring transport ines ‘ructure investment isthe Federal Transpert Infrastructure Plan (Buncesverkehrswegeplan, BWP). This plan sets out priority projects for public infrastructure investments over a period of 15. yeats. The latest BVWP (2015-2030) foresees a total investment volume of €270 billion until 2030, with 48.396 of investment al ‘ocated to road infrastructure, 41.6% to all, and 9.186 to water ways. It needs to be highlighted chat the underying traneport scenario does not envisage a modal shift to ral: ras projected 10 only cover 896 of passenger transport in 2030. An altemative scenario calevlated forthe Federal Environment Agency estime: tes that emission reductions could reach 1 Mt CO,e per year if ‘only 30%6 of investments was channelled into road infrastructure, rather than the 48.396 currently foreseen Thelistofprojecisin the BWP exceeds avaiable funds by far, mea ning that not al projects willbe irplemented, Every five yeas, the ‘Transport Ministry checks wich projects should be prortsed, and wether adjustments are needed in accordance with recent trans port developments, This provides an opportunity for re-evaluating priorities in accordance with emission reduction objectives, SOLUTIONS: ) Short term: Stop public investment on new federal highways, additional highway lanes, highway-like roads and bypasses ) Prioritise railway infrastructure, both regional and long-distance, especially projects that are key for implementing the nationwide in- tegrated regular interval timetable (‘Deutsch lond-Tokt’) and cross-boundary connections Revise Federal Transport Infrastructure Plan, and undertake a 1.5°C check. Include reduc- tion of road passenger and freight transport asa strategic target in of the Plan 2 Plan infrastructure based on coordinated time- table intervals (fahrplanorientierte Infrastruk- turplanung) External costs are not equally internalised The largest hidden subsidy’ is usually caused by exceral costs which arenotsuficientiyintemalsed External costsarecost fe norated by the transpor usr but borne by the society as a whole {orby third parties},and hence not taken ito acount by the tans or user, Such external costs can be accident costs, at pollution, climate changeimpacs, rise, congestion, destruction ofhabitat ‘Toxes or user charges are an attemptto internalise external costs in the price of transport use in order to make the polluter pay for the negative effects impose¢ on society, to influence behav our, recover costs etc.* extemal costs are not sufficiently reflecred, the market sends wrong price signals to consumers. Its import ant nate that there are inherent uncertainties in putting aprice ‘on these external costs. Since the magnitude of current and futu reimpacts cannot be determined with complete certainty, norto which extent impacts are atributable to a speeite activity, such calculations can always only be an approximation. For exemple, CE Delft calculates with a CO, price of 100 €/tC0,6, the German Environment Agency with 180 €/tCO,0°* There are also diferent concepts of how best to incemalise costs: eg, should charges reflect only marginal costs or average costs, or be set at 2 suficont level for achieving the environmental objectves?®” While thereisno complete certainty ard no single best approach, external costs calevations nevertheless give 2 rough incication ‘recent CE Delft study commissioned by the European Com rmission analysed the external costs of road and ral passe transport across EU member states, and contrasted trese with the taxes and charges raised. These also included the variable infrastructure costs, ie, maintenance (‘wear and tear’ costs *Average external costs and average variable infrastructure costs versus average taxes and charges in Germany (road and rail) A 14 12 oo €-cent/passenger kilometre Passengercar Bus li WB accidents WM sirpotution change Wi taxes an charges toed | a. = | | “il Cl Motorcycle Wh vcise Ml congestion Note: Motorcycle total average costs are above 40€-cent/pkm Electric Diesel Highspeed passengers rail passengers ral wettto-tank Ml infrastructure Fox Germany, the results show that high-speed tains have the lowest level of average externa costs per passengerckm (1.5 €-ct/ pkm), and that train in general have curently the highest ‘cost coverage ratil: average taxes and charges per passenger-km are clase to or even excoed average external and variable infas: ‘eucture costs. The diferent values fr ind vid. trein types can mainly be explained by ferences in energy taxatons(éisel vs. electricity) In contrast, charges and taxes for passenger cars ‘only cover around 4486 ofthese cass, Te rate is even lower for ‘Source: Own calulations based on CE Dale (20152 ‘buses, coaches and motorcycles, In other words, road passen- gers pay less of the extemal costs than train users per kilometre. Since road transport makes up 86% of total passenger trans- port, this has a largeimeact on total costs borne by society road transports the transport made for which society pays the most in absolute terms.” ‘The following sections take 2 more detailed look atthe tax and charges scheme for differing transport mades. ~ Cost coverage ratioInfrastructure access charges In Germany, train operators are charged for using the railway tracks, and aif ines pay for take-off and landing, and for parking aeroplanes in the airport. In contrast, cars and buses do not pay Post atin Only HGVs (above 7st) on ‘round 6% ofthe road network; cars and coaches. donot pay Access charges ‘German al track access charges are amongst the highest nthe EU Wile many countries only charge aiay operators forthe marg nal costs (wear and tear’ costs), Germany applies a full cost cover. ‘age principle, A study by Pw found that passenger trains pay € 7.61. ‘on average per tack kr =n Finlang they only pay a tech ofthis amount The Federal Network Agency reports that track access forusing roac infrastructure, and heavy good vehicles (H6VS) pay charges only an limited number af roads (tol Yes, full costs {fixed and marginal costs) for passenger transport. Hal price for freight charges can reach up to 78 €/track km Addtionaly, train opera- tors aay for accessing ratay stations ~ for Berin central station this currently amounts to € 4882 per stop. Track access charges in Germany make up around third of passenger ral operation costs (25.2088) Between 2013 and 2018, the level ofrailtrack access char 0s or long-distance passenger transport has increased by 18% « FR Es be w BE cH o i NI ar PL Dk NL 8 RO. GR w or sk nw se HR ac a €jtrack kilometre 3 A 0.00 € L900 € 200 _2.00€ Average track access charges for passenger rail transport by country (2017) 400 500€ -6.00€ ——TODE-—=—aDE mE Source: Puc (2a)Since 2018, the government subsidises freight railway transport by covering half of the track access charges. Far local passenger ral transport, the government already pays 2 significant share through tegional sation funds [Regionalisierungsmitel). Howe- ver, no Federal support is avaliable for long-distance passenger transport The German Monopolies Commission (Menopolkommissian) ‘considers that lower charges for long-distance ral services would faciltate services by new entrants, and improve utilisation ates ‘of tracks. This would allow full exploiation of existing track ca Uneven fuel taxation The different transport modes use different fuels. Cars, buses and ‘trucks ate largely fuelled by petral and diesel. Electricity sili ma. kes up only @ negligible share, Aeroplanes use kerosene, I con. ‘rast, 90% af al transpor volumeis already electric - only same regional trains and some freight trains sill operate on diesel Fuel taxation is a1 important tool for factoring in external costs, However, the German fuel tax rogime currently favours the most ‘emission-intensive transport modes: road and air transport. Ar lines are completely exempt from fuel taxes and are only cove. red toa limited extent by tne European Union Emissions Trading ‘Scheme, Fligns that leave the EU are nat included, nat even for the section of the journey in European air space. For intr-€U flights, 8596 af emissions allowances ae granted for fee. Onead. ditional loophole is that the EU ETS only covers CO, emissions Petrol/ciesel taxes Clesel tax benefits Fuel taxes pacites, including those outside the main axis, eg. tracks used forthe former InterRego network” The Commission caleulated that in 2017, long-distance rl services were charged € 918 mik lion fortrace access ntrast to ral, only 2 small share of road transport pays for Infrastructure use. Only 1GVs above 7.5 tors pay for using infras- ‘ructure, and only for federal roads and highways (around 50,000 km. Currently the tol varies between 9 and 27 €-ct/km, depen- ding on emission class, weight and noise." Passenger transport (car, coaches etc} does not pay for road use at all {and ignores other emissions. The climate impact af aviation is 2:4 times higher than the mere CO, emissions, especially in high altitudes, due to water vapour, aerosols and nitrogen oxides, Road transport pays taxes on petrol of 65 Etre, and a rede ced ate of47 é-ctltrefor diesel, The Federal Enviconmentiger- cyeslimates that this diesel tax benefit results in lost revenues of around € 7.2 billion annuals.” This tax benefit is only party ‘outweighed by a higher vehicle tax for diesel cars, which does not, however, depend on distance ar fuel consumption, With its 2019 Climate Package, the government has decided to intraduce £20, price of 25 €/1CO,,startingin 2021. This would increase the price of petrol and diese, but only by around 75 €-culte” The CO, price is sett rise +0 6! in 2026. Electricity ta, fll rate for long-distance, reduced rate for reg anal rains No only electricvehicles pay | Yes (on around 90% of trans- No surcharge) port volume) Emissions trading scheme No Yes, but 85% of free allowances and extra-EU fights not covered Yes for electricity al allowan. ces under auctioning ALL. €-ct/Wh, il operators in Germany pay one of the hig: hess electrcitytax rates in Europe, with only Austria charging ig her rates. The German NGO Alisng pro Schiene estimates that rail operators pay € 141 milion in fuel taxes, and €176 millon in renewables surcharge every year"0.00 BE, FI, Wy SE,SK, CZ, UK (Has ok, FR, ec, T.LU RO, ES 010 012 025 08 i Re (sg €cent/kWh 0.0% 03s 050 Electricity tax for railways by country (2019) 125 150 Value added tax The final price a transport user pays is also influenced by the value-added tax VAT), Domestic flights pay the full rate of 19%, bout no such tax 's levied on tickets for international flights in Germany, This glves aviation a clear advantage, The VAT rate for regional trains is 79%, for longedistance train tickets the rate was Sure: lian ara Seniene 2018) reduced from 1996 to 798m late 2019, Far bus and coach tickets, ‘Germany is one of tre few EU countries to charge the full 19% tax rate, As car users da not need to buy a ticket, the comparison is. not straightforward - they pay 19% VAT on the fuel they buy, the vehicle itse', spare parts etc a Fullrate of 1986 0n coacr/bus lickets, and on fuel for cars/ HGvs VAT on tickets Aviation tax The aviation taxis charged on aeroplane tickets and was introdu- ced in 2011 to counterbalance the kerosene tax exemption. The tax rate is dependent on the distance travelled, and as of 1 Aaril 2020 was increased to € 13,03 (short haul), € 33.01 (mid haul), and € 58 long haul). the revenues gathered through this tax and the auctioning of EU ETS allowances together exceed € 1.75 billion foefore April 2020-€1 billion), the government can cap the tax. The government has already made use of this exemption in 2012, 2017, 2018, 2019 and 2020, This cap nullfes the impact of the EVETS on airlines, Full rate of19% on domestic Aight; NoVAT on crss-boun dary fights Reduced rate of 7% The aviation axis sila long way ff frm creating far concitions ‘of competition: ithe same tax rate was charged on kerosene as ‘on pete, revenues of around € 8.1 bilion could be collected in the aviation sector, and charging the fll VAT rate on internato nal fights would amount ro €42 billion This means that the aviation tax would need to be T times higher thar t surent € L175 bilion maximum to make up forthe ‘ax exemptions.Company car taxation ‘Companies can deduce the purchase and use of company cars from ‘ayes - around 6506 of newly reg'stered cars are company cars. They thus havea significant impact on average feet emissions. If employees use company cars for private purposes, they only have to declare 196 of the cars listing value as 2 non-cash be nefit, and often companies even pay fer the fuel. Studies have found that thisincentivises employees to make mare se of cars, ‘and increases overall transport demand.” Several stucies have found that employees tend to travel les by train, bicycle ee, be ‘cause car use becomes the standard, and almost ree’ transport mode There are estimates that the very low tax rate represents a subsidy of €3:3 105.5 billion annually” Companies also tend :0 buy cars with higher engine power and higher CO, emissions than private buyers do.® Stil, in contrast to many EU member states, ‘the German company car taxation scheme is not even oased on CO, emission intensity If tre company provides the equivalent to a free to use’ compa- ny car, an annual rail subscription (Behncard 100}, the cost of, ‘the Bahncaré 100 is counted as taxable aay ifthe value of actual business trips is ess than the costs of the Bahncard, che difference ‘counts as taxable pay} Support for airport operation costs Most airports, especialy small regional airports used by low-cost airlines, are loss-making and would go bankrupt without public subsidies, The federal govemment supports small regional airports with ‘around € 20 milion per year. With this subsidy, airport operators can recover parts of the costs of the a traffic control Much more signifcant, however, are subsicles provided by the state and city governments, These data are not always openly avalla- bie but some examples have been made public: the Dortmund airpon, for example, has received € 400 million over the last 20 years from the city of Dortmund"? Nuremberg airport received € 8.7 million in two years. Most airports are partially ar completely publcly-owned under takings. This means that the construction of aiparts is often paid by the state, The new Belin airport (37% Bein, 3746 Bran- ddenburg, 26% Federal government) has cost € 7 billion so far, of which the Berlin, Brandenburg ane the Federal government provided €29 billion in equity capital and in loans, which might not be paid back earlier loans have already been converted 0 cuity capital As sharehoidess, the state orcity also has to car 1 part ofthe operational esses. Kassel aiport mace losses of €6 milion in 2017, which was largely coverec by the State of Hossewith ts 688 shares "In March 2020, the Berlin atports Tee gel and Schénefeld received € 300 milion in equity capital from its shareholders (Bertin, Brandenburg, Federal government) for cushioning the elects of ovid-18.7‘Governments can also channel additional subsidies theough the- se airports, eg, for operational costs. The Munich airport GmbH, forinstance, belongs 5146 to the State of Bavaria, 26%6 tothe Fe. eral Republic of Germany and 2346 to the City of Munich. Mu nich airport has supported airlines with € 225 million between 2005 and 2018, and €25 million in 2019, for the operation of spe: «fic conn SOLUTIONS: ) Phase-out direct subsidies for airport operation Support for R&D, education and training favours road Research plays a key role in promating diferent transport mo: des. In 2018, the German government provided around € 71 mil lion for R&D for road transport, but only €3 million for ral rans: port- thats almost a factor of eight. However, the funds available for aviation are actualy much higher. Ih 2018, the government provided € 156 milion for aviation re search (Lufahforschungsprogramm LuFo); Federal and state go vernments jointly unded tre German Aerospace Center {DLR} with £€ 206 milion dedicated to aviation research, the Ministry for Tans: port offers €0.7 millon annually for aviation R&D; and the Ministry for Economy offers grants for R&D related to avietion equipment ** ‘The gavernment also supports vocational education and training for road “eight transport (€ 125 milion in 2019), but net for equ: valent training for the ral sector, although shortage of skilled wo kets is one of the main reasons for cancellation of rail services Finally, the government also supports the automotive industry indirectly with scrappage premiums for old cars, premiums on the purchase of electric vehicles, or simply by purchasing or lea sing cas forthe public sector. Aparliamentary enquiry by the Left partyin 2017 revealed thal government support forthe automo= tive industry totaled € 12 bilion over the span often years." SOLUTIONS: ) Support education and training in the rail sec- torto help overcome shortage of skilled workers and } Support R&O in the rail sector to improve rail performance Number of projects started Prodee coe a 19 Outflow of resources in oes €708 milion €87 millon €24 million Outflow of resources ewe sete €2629 million €42.3 milion €508 millon Source: Keine Anirage Drucksache 19/14683,Safety costs of road transport are externalised Trains ae one ofthe safest means of transport. The iskof an ac- dents 113 times higher onthe roac than on attra.” Safety re- ulations ‘or cars co not reflect the actual safety risks These risks are thus not reflected in the costs of driving a car. The costs of accidents areexternalised ane paid by society, eg via the health system. I contrast, train operators need to achere to high safety standards. Just to give afew examples ¥ automatic stopping ofthe tan fit passes a red signal train drivers require a special training fo eaca tain type, and foreach route 2 fie protection regulation is much stricter on tains than on buses! For eross-boundary tains, operators often need to full various diffrent safety schemes, increasing costs significantly, The Ger- man government is adcitionally planning to charge train and network aperators fees for ‘government services, eg. for calling the police, or for controling safety regulations. Stic regula- tions have also been aconted for airlines and airports, but the government partially steps in for these costs (see above} SOLUTIONS: } Provide financial support to rail operators to co- ver safety costs, so as to create a level playing field across transport modes Recommendations STRATEGY |} Adopt acomprehensive long-term low-carbon mobilty strategy, encompassing al transport modes and ther synergies } Short term: Stop public investment on new federal highways, addtional highway lanes, highwaylke roads and bypasses NERA | Prortiseralway infrastructure, both regional and long-istance, especialy projects that are key for implemen STRUCTURE | ting the nationwide integrated regular interval timetable (Deutschland-Takt’) and cross-boundary connections FINANCE |) Revise Federa Transport infrastructure Plan, and undertake a 15°C check. Include reduction of road passenger and freight transport asa strategic target in ofthe Plan } Plan infrastructure based on coo-dinated timetable intervals (fahrplanovientierteInrascrukterplanung') } introduce kerosene tax and fl VAT fr airlines, and work towards fll auetioning of FTS allowances, As 2 frst step, abolish € 1.75 billion cap on airticket tax revenues Reduce track access charges for trains to the level of marginal costs TaxaTion |) Gradually introduce a comprehensive tll forthe use of highways, starting betore 2025 ) increase (director indirect) CO, price toa evel that has areal steering effect, while using the revenues for decrear sing social and rural-urban faimess gaps Relate company car tax benefitto CO, emissions and limit deductibility ao ry |) Phase-out direc subsidies for airport operat operarion |? Phase-ut direct subsidies for airport operation RED, |} Susport education and training inthe rail sector to help overcome shortage of skilled workers and TRAINING — |} Suoport R&D inthe rail sector to improve rail performance sarery costs |? Pevide nancial support to ral operators to cover safety costs so as to create a level alaying fed across trans- port modesEndnotes specs napping son ha tease ‘ Secemndec Ot lea wud cuentas rt Smeets yma sou ae Eien, Ineo geseehsccnge mtn ‘Steen hg renge stn esl de Sc He ets hagrsieratedsratn escent sabasrmetah rn ow rdgeeeae Gea wan aaoomoceuehr ammonia BESTE Ss peuieemsinge erate Alara ot corn epimers clincoeb Seria nmcar eae Reet ee aes eesti ge boson emis ‘Siemans Revere fd ened enki saldpeamnstensencrers band ire pee Segarra nataStngth barsbhowte pro etn Zoe mde Bacar Generate Eieteemae i Se ern oe: pnb eine hrm nae Binsepal Soba ‘Bronze tartan uc hen sent eens ‘temetccane 8 rary head ac St RANT Ranta Spe orpin santana tases olimniesrsuiitanegcinarge cog proses, enh nt rd Sanne dent Motinewtngncndaetnteeratine stan Renee ols ost tener Bila siue eines choanotisee mete ion ‘bieh ia Senn amends! 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[ene insane nay 8s pe andi ono a AS cnr mnsnmgnnenrnonnsshesepecn oer em 4280 Moen dD Kexatracasemevoncarenot Irena asavactonnpgcvatersin' sme estat Re atemeanrdot ertnasa-ioren-gueetbe-haretie SSS Hr aaa ee te {Steer ah Seine Sve cle Bikey above Meta Caer eee ee re amisatensn SE an ihrer namegcdnas eames Ect hunt aprccntstirncaeaatesadmanihtveiedn aint Tica greenies toned tecittethodsmamiatradt-dhmenecohege mt saotgengesaetaienge kag tie bean 8 ne tion ma ipsetoecn ncn ogaenstoneninswenaca ga Titania Seoncengeegebotancedecensoenncuae nt abies ieee nichnantgentgpr senna ince pccarsnpassseccaspomtise shun aarp mene eseniengen sores geeGermanwatch Following the motto of Observing Analysing Acting, German- watch has been actively promoting global equity and lvel- hood preservation since 1981. We focus an the polities and ‘econamics of the Glocal Narth and their worldenide conse- ‘quences, The situation of marginalised people in the Giobal South is the starting point for aur work. 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