Final EventLisbon, 29th November

Carlos Alvarez-Cascos MAE External Costs Calculator

Transportation

Work

Emissions &

socio-economic

impact

Monetization

GOALestimating the environmental merit, as proposed

DESIGNED TOcalculate and compare the external costs

of a Motorway of the Sea

vesus its road only alternative

External cost calculator tool on the MAE example

Methodology for calculating MAE eco-incentives

3scheme

CO2

SOX

NOX

PM

GW EU Cost €/t

Cost of emissions at sea €/t

CO2

SOX

NOX

PM

Congest.

Accidents

Noise

Distance

Speed

Fuel type

Technology

Distance

EURO level

Route

GW EU Cost (€/t)

Cost of emissions at land €/t

Socio-economic costs €/km

EXTERNAL COST MARITIME

€/truck

Capacity

Occupation

Passengers

Number of Trucks

EXTERNAL COST ROAD

€/truck

Savings€/truck

Eco-incentive €/truck

Port Call (time)Port emissions

Port Access (km)

Transportation work

Port A

Port B

Destination

Origin

The MoS service (blue dotted line) is comprised

of the following segments:

Trucks approaching the port + vessel at port

Vessel sailing

Vessel at port + trucks leaving the port

The external cost for the road only alternative is

calculated for the equivalent number of trucks

using the road only route from origin to

destination.

Transportation work is defined for the MoS as

the average number of trucks transported per

sailing from Port A to Port B reducing the road

usage of the equivalent number of trucks.

1) The road only distance from origin to destination is assimilated to the road distance from port to port

2) Additionally, two urban legs are considered: one accessing origin port (A) and one leaving destination port (B) from/to circumvallating highway. Emissions and socio - economic impact of both urban legs will be added to the maritime alternative. Default value given is 9 kms.

3) Vessel occupation 70%. This value is fixed based on a market assumption for MoS. This value, along with the vessel capacity will give the number of trucks being diverted from road per sailing.

4) An average truck occupation of 15 lane meters is assumed. This average is considering 16 m for accompanied units and 13,6 m for non-accompanied

5) Passengers and private or new vehicles are not eligible. Therefore vessel emissions need to be allocated to roro freight only. The following assumptions are taken:

5.1) 10 passengers (and their cars) are equivalent to one truck.5.2) 6 new vehicles are equivalent to one truck

Therefore a vessel trucks equivalent (Te) = 70% of vessel lane meters + average_pax_per sailing/10 + new_vehicles_per_sailing/6

6) Externalities per truck on board = vessel_total_externalities / Te

70%

MAE assumptions

Transportation work (cont.)

Emissions & socio-economic impact

ROAD ONLY• Environmental and socio-economic impact to

be measured: GHG emissions (CO2) SOX emissions NOX emissions PM emissions Congestion Accidents Noise

• Average truck fleet operating international freight transport will be characterized using a mix of EURO standard categories.

• Unitary emissions will be given by the EURO standard mix.

MOS• Environmental impact of the ship trip to

be measured: GHG emissions (CO2) SOX emissions NOX emissions PM emissions

• Vessels will also incur in emissions while at port

• Road access impact of trucks accessing and leaving ports will also be accounted following the same approach taken for road only trips.

• Both above: port emissions and road access emissions will be disaggregated as they are considered “urban areas” with a higher impact on citizens and therefore with higher monetization values.

Next to the transport work -number of trucks, road distances, port access and

maritime distances- the unitary emission of a truck travelling through each

alternative is calculated….

Road emissions. EURO standards

3

2010 2016 2020 TRUCKS

PréEURO 34% 0% 0% 0

EURO 0 0% 0% 0% 0

EURO I 26% 0% 0% 0

EURO II 25% 0% 0% 0

EURO III 15% 20% 0% 0

EURO IV 0% 32% 12% 12

EURO V 0% 26% 26% 26

EURO VI 0% 22% 62% 62

TOTAL 100% 100% 100% 100

FLEET

The mix of EURO standard for the fleet is estimated for a certain period based on published statistics and fleet renewal projections.

CO VOC NOx PM PN Smoke

(1/kg) (1/m)

1992 ≤ 85 kW 12,06 2,948 21,44 1,64016

EURO I 1992 > 85 kW 12,06 2,948 21,44 0,9648

1996.10 10,72 2,948 18,76 0,67

Euro II 1998.10 10,72 2,948 18,76 0,402

1999.10 EEV only ESC & ELR 4,02 0,67 5,36 0,0536 0,15

EURO III 2000.10 5,628 1,7688 13,4 0,268 0,8

EURO IV 2005.10 4,02 1,2328 9,38 0,0536 0,5

EURO V 2008.10 4,02 1,2328 5,36 0,0536 0,5

EURO VI 2013.01 WHSC 4,02 0,3484 1,072 0,0268 8,0×1011

EU Emission Standards for Heavy-Duty Diesel Engines: Steady-State Testing

(g/kg)Stage Date Test

a - PM = 0.13 g/kWh for engines < 0.75 dm3 swept volume per cylinder and a rated power speed > 3000 min -1

ECE R-49

The specification of maximum emission factor from the specs and tests will give the emissions per unit of fuel consumed.

NOX PM

129% 114%

129% 114%

129% 114%

152% 222%

172% 194%

158% 210%

165% 211%

100% 100%

EEA Real life emissions for pre-EURO VI HGVs were found to be higher than the standard limit.

This table adjusts EURO emission according 2016 1.A.3.b.i-iv Road transport 2016 update Dec 2016 published by the European Environmental Agency.

36 l/100 km

10 ppm

HGV gasoil consumption, common to all EURO standard vehicles

Sulfur content limit for all gasoil used in road transport in Europe since 2010

Road socio-economic impact

“Parts of the congestion costs are ‘paid' by the waiting and delay costs of the

users; other elements of these costs, namely those imposed on other users,

are not.” 1(1) Update of the Handbook on External Costs of Transport. 2014. Ricardo AEA

Congestion is directly linked with distance travelled, infrastructure capacity and flow level.

ROAD DISTANCE ESTIMATION (Km)

URBAN 0% 0

SUBURBAN 10% #

RURAL & MOTORWAY

90%#

The table below is the default characterization for ALL road-only routes. Port access is all urban traffic

Only 10% of the time road traffic is “near capacity”, this is when traffic is above 75% a below 100% capacity

MAE assumptions

Accidents are linked to distance travelled and location.

Noise is linked to distance travelled, location and traffic density.

Predominant traffic is “dense” in urban areas and “thin” in suburban/rural areas and motorways

Maritime emissions

Each vessel will be accounted by its own environmental merit. MAE calculator assumptions would be overridden by real emission values supported by certificates. (Direct Entry).

0

20

40

60

80

100

120

140

160

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

t/d

ay

Speed kn

Default MGO fuel consumption curve for an average roro or ropax vessel AIR POLLUTION EMISSIONS (Kg/TON FUEL)

CO2 SOX NOX PM2,5

MDO 0,5% 3206,00 10,50 50,50 2,30

HFO 1,5% 3114,00 31,50 51,00 3,40

HFO 2% 3114,00 42,00 51,00 3,40

LS HFO 0,5% 3151,00 10,50 51,00 2,30

LNG 2750,00 0,02 8,40 0,02

Default emissions factor per ton of fuel Assumption for a 4 stroke Tier II engine

TECHNOLOGY CO2 SOX NOX PM2,5

NONE 100% 100% 100% 100%

SCRUBBER 102% 2% 100% 15%

DIESEL PARTICULATE FILTER (DPF)100% 100% 100% 32%

SCR 100% 100% 15% 100%

SCRUBBER + SCR 102% 2% 15% 15%

ABATEMENT

Default emissions reduction by abatement technology

(1) COMMISSION DELEGATED REGULATION (EU) 2016/2071

(1)

Port call and port access

Port call emissions must be accounted as part of the MoS externalities studies. Emissions at port have a higher impact on health as ports are often surrounded by high density populated areas.

Vessels adopting onshore power supply solutions would reduce their environmental footprint and will be accounted for it.

Trucks arriving and departing from ports in the MoS route also have a socio-economic impact as HGVs on urban or metropolitan areas have the higher impact.

Socio-economic impact from

road access to ports is

calculated as urban traffic,

with a mix of day and night

operation

Port calls have an average 6

hours duration and 2 tons of

fuel consumption.

All vessels use gasoil in

auxiliary engines except for

LNG vessels, that use LNG

MAE assumptions

Upstream emissions when using

OPS are ignored

2019 Update

MonetizationMAE calculator has been designed using the recommendations from two key documents, as main references:

2008 Handbook on estimation of external costs in the transport sector. Produced within the study Internalization Measures and Policies for All external Cost of Transport. CE DELFT an others, commissioned by: European Commission DG TREN

2014 Update of the Handbook on External Costs of Transport. Ricardo-AEA, commissioned by : European Commission DG Mobility and Transport

The Handbook compiles and evaluates the existing scientific and expert work on external cost estimation:

“The Handbook aims to provide the state of the art and best practice on external cost estimation for policy makers. It considers all transport modes and the work carried out at EU and as well at national level.”

“The handbook has been reviewed by a panel of more than thirty experts, including experts who were designated by Member States, and been discussed with these experts at a meeting on 22 November 2007.”

The 2014 update is currently under a third revision due 2019

Cost of global warming emissions

Which is the value of a tone of CO2 that has not been emitted into the atmosphere?

It all depends on what is meant by value:1. The expected mitigation of climate-change damage (IPCC)2. The cost of reducing CO2 emissions3. The social cost of carbon 4. The politically negotiated value (EIB)5. CO2 market prices (ETS)

The 2014 update shows great discrepancies when compared to the 2004 values.

A third reference has been used to support the final assumption. The 2004 value is closer to the European Investment Bank Appraisal reference guide

CO2 (central values) 2010 2017 2020 2025 2030 2040 2050

IMPACT 2004 25 34 40 55 70 85

EIB APPRAISAL 25 32 35 45 55 65

RICARDO 2014 90 129 225

2008 Handbook (IMPACT) value of 34€ in 2017

MAE assumptions

Cost of emissions

NAME PERCENT. RURAL SUBURBAN URBAN

AUSTRIA 0% 42.033,56 € 75.504,81 € 239.382,93 € 19.238,21 € 2.253,83 € 14.089,47 €

BELGIUM 0% 38.405,95 € 66.689,33 € 229.242,29 € 12.063,41 € 3.563,71 € 15.038,69 €

BULGARIA 0% 34.862,00 € 65.635,00 € 212.875,00 € 14.454,00 € 756,00 € 12.598,00 €

CROATIA 0% 31.649,00 € 61.539,00 € 208.779,00 € 15.149,00 € 1.819,00 € 12.317,00 €

CYPRUS 0% 25.040,00 € 51.200,00 € 198.440,00 € 6.465,00 € 1.122,00 € 12.594,00 €

CZECH REPUBLIC 0% 43.028,00 € 68.427,00 € 215.667,00 € 15.788,00 € 1.648,00 € 14.112,00 €

GERMANY 0% 51.983,81 € 78.346,47 € 235.893,27 € 18.231,73 € 1.988,06 € 15.532,12 €

DENMARK 0% 14.084,78 € 43.246,36 € 199.468,00 € 7.111,88 € 1.624,39 € 7.730,45 €

ESTONIA 0% 15.359,00 € 49.948,00 € 197.188,00 € 5.221,00 € 1.115,00 € 8.441,00 €

SPAIN 26% 14.876,30 € 49.500,37 € 201.304,81 € 5.117,88 € 1.170,19 € 7.270,61 €

FINLAND 0% 8.292,00 € 43.997,00 € 191.237,00 € 3.328,00 € 871,00 € 4.507,00 €

FRANCE 28% 35.201,27 € 68.234,64 € 223.867,32 € 13.795,96 € 1.791,62 € 13.013,78 €

GREECE 0% 19.329,00 € 50.605,00 € 197.845,00 € 3.851,00 € 854,00 € 8.210,00 €

HUNGARY 0% 47.205,00 € 74.641,00 € 221.881,00 € 19.580,00 € 1.569,00 € 14.348,00 €

IRELAND 0% 16.512,00 € 47.420,00 € 194.660,00 € 5.688,00 € 1.398,00 € 6.959,00 €

ITALY 46% 26.305,90 € 53.679,59 € 211.373,63 € 11.592,50 € 1.330,18 € 10.576,13 €

LITHUANIA 0% 23.068,00 € 55.535,00 € 202.775,00 € 10.790,00 € 1.511,00 € 10.945,00 €

LUXEMBOURG 0% 45.688,00 € 71.308,00 € 218.548,00 € 18.612,00 € 3.506,00 € 15.103,00 €

LATVIA 0% 19.528,00 € 53.638,00 € 200.878,00 € 8.109,00 € 1.499,00 € 10.000,00 €

MALTA 0% 30.009,48 € 59.241,15 € 98.132,00 € 1.983,00 € 1.007,00 € 6.420,00 €

NETHERLANDS 0% 32.151,22 € 52.776,21 € 213.488,67 € 12.633,02 € 3.007,08 € 18.269,53 €

POLAND 0% 47.491,00 € 74.215,00 € 221.455,00 € 13.434,00 € 1.678,00 € 14.435,00 €

PORTUGAL 0% 19.794,75 € 52.899,86 € 211.550,96 € 2.108,67 € 1.129,22 € 5.333,63 €

ROMANIA 0% 56.405,00 € 84.380,00 € 231.620,00 € 22.893,00 € 1.796,00 € 17.524,00 €

SWEDEN 0% 14.578,00 € 50.210,00 € 197.450,00 € 5.247,00 € 974,00 € 5.389,00 €

SLOVENIA 0% 39.633,00 € 67.670,00 € 214.910,00 € 16.067,00 € 1.975,00 € 12.422,00 €

SLOVAKIA 0% 54.030,00 € 79.270,00 € 226.510,00 € 21.491,00 € 1.709,00 € 17.134,00 €

UNITED KINGDOM 0% 15.695,09 € 53.164,81 € 217.926,37 € 7.358,54 € 1.991,82 € 10.285,85 €

OTHER 0% 32.155,16 € 63.476,89 € 217.098,26 € 11.826,72 € 1.726,03 € 11.926,56 €

25.837,89 € 56.673,62 € 212.265,60 € 10.533,31 € 1.417,98 € 10.402,98 € AVERAGE COST

ESTIMATED DAMAGE COST OF MAIN POLLUTANTS (SCENARIO)

COUNTRY PM2,5

NOX VOC SO2

Source: output values from RICARDO 2014

Share by country (scenario) taken from route definition

Share of rural/suburban/urban fixed for all routes.

2010 values were brought to date using inflation correction table, per country

Source: output values from RICARDO 2014

Share by sea taken from route definition

2010 values were brought to date using inflation

correction table, per country.

DAMAGE COSTS OF MAIN POLLUTANTS AT PORT (€/TON)GLOBAL WARM. AIR POLLUTION

CO2 SOX NOX PM2,5

34 € 10.403 € 10.533 € 212.266 €

Source: output values from RICARDO

2014

1. Choose the route. Direct entries allowed.

2. Choose the vessel/route details: capacity, occupancy (70% suggested), number of passengers and number of new vehicles (average figures for a sailing). Choose the fuel type, the abatement technology and the vessel speed.

3. Choose whether to include socio-economic factors (congestion, accidents and noise).

4. Choose whether actual emission data for the vessel/route are known (thus entering through the DIRECT ENTRY page) or let the calculator estimate them for you

5. Choose COLD IRONING to remove ship emission at port from the calculation.

6. Values are compared between the MoS and the ‘road-only’ alternative (Port call and Port access are both incurred to MoS)

7. Results

14

1

2

3

45

6 7(*)

(*) Parallel. A route where road only and MoS alternative cover the same distance

Using the tool

Results: Sample case.

• MoS used to be “greener” than the road alternative back in 2010 with a saving of 76€ per truck

• By 2020 the difference is reduced based on the merits from EURO VI standard trucks

• Sulphur cap will induce a better performance

• Strict compliance with the Sulphur cap will turn MoS alternative greener again compared to the road-only alternative. However, the difference will be much smaller (25€) than back in 2010.

• A vessel using LNG would increase the gap again to 67€ per transported unit15

SUPPORTING SLIDES

16

Ex-ante analysis (cont.)

17

WEST MED REGION ATLANTIC REGION

Cost of emissions compared

- € 2.000 € 4.000 € 6.000 € 8.000 € 10.000 € 12.000 €

MED LAND

ATL LAND

MED SEA

ATL SEA

SOX (€/t)

- € 2.000 € 4.000 € 6.000 € 8.000 € 10.000 € 12.000 €

MED LAND

ATL LAND

MED SEA

ATL SEA

NOX (€/t)

- € 50.000 € 100.000 € 150.000 € 200.000 € 250.000 €

ATL URBAN

MED URBAN

ATL SUBURBAN

MED SUBURBAN

ATL RURAL

MED RURAL

MED SEA

ATL SEA

PM (€/t)

€/t

low mean high low mean high

CO2 7 10 11 7 10 11

PM2,5 32.663 227.923 1.539.491 4.554 31.775 214.621

NOx 591 6.937 53.278 4 6.937 48.914

SO2 7.461 31.431 149.425 1.394 27.178 164.175

Cities € Rural €Source: Transport Economic Unit Prices

for the use of socio-economic analyzes

Prepared by Transport DTU and COWI for

the Danish Ministry of Transport

Road emissions evolution

• Euro Standard has drastically reduced NOX and PM emissions over the last 20 years.

• SOx reduction was faster as is enforced directly linked to the sulfur fuel content at the pump.

• Real life emissions per average HGV on the road are a bit higher than the standards due to differences in standard limits and real road emissions up to EURO VI.

• This evolution translates in almost a 50% reduction of overall external cost of road transport from 0,19 €vkm to 0,10 €vkm from EURO I to EURO VI

19

0

5

10

15

20

25

Euro I1992

Euro II1998

Euro III2000

Euro IV2005

Euro V2009

Euro VI2014

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

NO

X

SOx

P

M

EUROPE EURO STANDARD HGV EMISSIONS LIMITS(g/kg)

SOX PM NOx

0

5

10

15

20

25

30

2010 2015 2020

0

0,2

0,4

0,6

0,8

1

1,2

NO

X

SOx

PM

REAL FLEET HGV EMISSIONS (g/kg)

SOX PM NOx

Transport externalities

Currently, external costs are not reflected in market prices of freight transport and are hence not taken into account in modal choice decisions of shippers.

However, it is recognized that if such external costs were internalized in transport prices across all modes, modal share of greener and competitive alternatives to road would be higher.

Recent studies show that current fuel excise duties, infrastructure charges and taxes do not reach the infrastructure cost of road transport, hence leaving other environmental and socio economical externalities uncovered.

Internalization of road external cost was the goal of the Eurovignette Directive (1999/62/EC) but is facing great implementation difficulties. Revised or new policies and approaches are needed.

20

Incentives oriented to transport users of Motorways of the Sea, Inland Waterways or Rail somehow mirror the Eurovignette policy with incentives instead of surcharges.

Swapping the stick for the carrot

Effective ways to internalize external costs