The economic implications of carbon neutrality ambitions in extra-European freight transport

Abstract

Achieving net-zero emissions in international freight transport is crucial, but the European Union’s current policies fall short of mandating full climate neutrality mainly due to economic concerns. A major gap in scientific impact assessments is the lack of product-level and transport mode-specific trade elasticities. This study addresses this gap by estimating trade elasticities, analyzing transport cost increases, and assessing economic impacts under different EU carbon policies. The results show that maritime transport faces higher relative cost increases, while air transport sees greater absolute increases, leading to sharper price hikes for air transport goods (0.1%–0.5%) compared to sea transport goods (0.1%). Under the carbon neutrality scenario, European imports drop by €24.7 billion and exports by €27.4 billion. Kerosene and fuel oil demand decrease by 4.2 and 0.9 million tons, respectively. The findings suggest that more ambitious EU climate policies are feasible with manageable economic impacts.