4 Million Tonnes Additional CO2 due to Proposed EU Cabotage Laws in Mobility Package

In December 2019, after several years of curious negotiations, EU policymakers have agreed on a hazardous consensus on new rules for the EU’s CO2-intensive road freight transport sector.

The so-called Mobility Package, if ratified by the European Parliament and the Council, would be introduced in 2021. It would significantly inflate the number of empty trailers on the streets and further increase CO2 emissions in the EU.

Estimates (see below) suggest that the additional CO2 emissions would amount to about 4 million tonnes annually – an amount equal to the annual CO2 emissions of 3 to 4 medium-sized hard-coal-fired powerplants. As Germany is the country where almost half of EU cabotage takes place, German citizens would suffer most from the proposed Mobility Package regulations.

Why does the European Parliament’s Transport Committee back a law that is known to be harmful to the environment?

The European Commission warned in December that the new rules would cause environmental harm and therefore would not be in line with the ambitions of the European Green Deal.

Nevertheless, some EU Parliamentarians and the Member States still want to go ahead with a law that would increase the number of empty truck runs in the EU – and explicitly discriminate against citizens with the wrong EU passport, mostly people from Central and Eastern Europe.

Why? Because of crude protectionism within the EU’s contested Single Market. Freight transport by national operators dominates in Western European countries while international transport, which includes cross-trade, cabotage, and internationally transported goods, which are loaded/unloaded in the reporting country, prevails most in Central and Eastern European countries. Accordingly, Western European governments, as well as like-minded politicians in the European Parliament (e.g. in the European Parliament’s Transport Committee), aim to protect their national operators.

Where does truck freight cabotage come from?

Despite the principle of universal non-discriminatory transport policy, the current cabotage law in the EU stifles economic opportunity and economic convergence. The EU freight cabotage regulations were initially invented to keep foreign truck drivers out of Western Europe’s domestic markets. EU policymakers designed a two-class system that has always privileged companies and workers from the high-wage Member States while punishing those residents in the low-wage Member States. Consequently, these restrictions contributed to the manifestation of intra-EU wage inequality and impede economic convergence in the EU.

The principle of a common and non-discriminatory EU transport policy was set out in the EU’s founding treaties, the Treaty of Rome, calling for the freedom to provide international transport services across European borders. However, Member States’ appetite for liberalising legislation remained low. In 1982, the European Parliament found that Member States measures ‘by no means meet the requirements of the common market’. Following a Parliament Resolution, the Court of Justice found that the Council of the European Communities had indeed failed to establish the freedom of transport services within the European Community.

The initial EC regulation was only implemented in 1993 allowing a limited number of truckers with ‘community authorisation’ to provide road haulage services within the other Member States – on condition that they were only provided temporarily. Back then, the Member States still operated a strict authorisation and quota system for cabotage operations, explicitly aiming to keep foreign EU competitors out of their national markets. Finally, in 2009, a new regulation entered into force allowing ‘foreign EU truckers’ to carry out ‘no more than 3 cabotage operations within 7 days’ following an international consignment. Through the 2009 ‘liberalisation’, the European Commission explicitly aimed to reduce the number of empty operating trucks (vehicles with no merchandise), the costs of transport, traffic and pollution.

Why is the EU’s truck freight cabotage regulation so harmful to the environment?

Truck or heavy-duty traffic is far from being emission-free. On the contrary, the EU itself estimates that trucks, buses and coaches are together responsible for about a quarter of CO2 emissions from road transport in the EU and about 6% of total EU emissions. Deduct buses and coaches and you will realise that the emissions of trucks alone are substantial, which is why the EU recently introduced the first-ever EU-wide CO2 emission standards for heavy-duty vehicles, setting targets for reducing the average emissions from new lorries for 2025 and 2030.

Cabotage regulations certainly reduce the net impact of this regulation, because cabotage rules urge haulage companies – by law – to frequently call their vehicles back home. Despite the liberalisation of 2009, cabotage operations are still highly restricted, already causing thousands of empty trailers on European streets every year.

The new restrictions on cabotage, as proposed in December 2019, would substantially increase the number of empty truck runs across the EU, i.e. vehicle kilometres and CO2 emissions respectively.

According to the current consensus between the EU Council, the European Parliament and (previously) the European Commission:

• Companies could generally continue to carry out 3 cabotage operations within 7 days in a given EU country.
• A new 4-day cooling-off period would be introduced for cabotage operations in the foreign EU country before further cabotage operations can be carried out in the same country with the same vehicle.
• A vehicle would have to return to the base (country) every 8 weeks.

It is difficult to precisely estimate the additional CO2 emission burden that would result from these new restrictions. Many factors determine the amount of loaded transport and the share of empty trailers.

In 2019, KPMG conducted a comprehensive impact assessment for Bulgaria, based on two scenarios:

With regard to the negative impact on the number of empty truck runs, KPMG states that ‘[b]ased on data provided by a sample of Bulgarian international hauliers (37 transport companies), around 53% of the additional mandatory homecomings will run empty coming back to Bulgaria, and again around 38% will travel empty to the EU after the cool-off period.’

KPMG finds the number of empty trucks would significantly increase because of ’Mandatory Homecomings’, translating in lower economic opportunities and a substantial increase in fuel costs. The increase in companies’ fuel consumption (largely diesel) would translate to ‘additional CO2 [emissions] as a result of the empty runs [of] around 88,500 tonnes, which represents a 3% increase in total CO2 emissions coming from international road transport. This will increase the total greenhouse emissions generated by the transport sector in Bulgaria by 1%.’

In the proposed rules scenario, KMPG was assuming ‘one cabotage operation in the first three days after unloading and a subsequent cross-trade operation’. The new consensus currently struck between the EU Parliament’s Transport Committee and the Council (which was recently sharply criticised by the Commission) is somewhat different, still allowing for three runs within 7 days after unloading. At the same time, KMPG did not account for the ‘return-to-base’ policy, a novel bureaucratic innovation requiring vehicles to return to their base every 8 weeks.

So let us simply assume that KPMG’s numbers for the Bulgarian haulage sector broadly reflect the changes cabotage and cross-trade operations of haulage companies that are based in other EU countries. According to Eurostat data, Bulgaria accounted for only 2.2% of EU-wide ‘empty international freight transport’ in 2018 (measured in million vehicle kilometres), which corresponds to an annual increase of 88,500 tonnes in CO2 emissions. These numbers can be extrapolated on the basis of Eurostat statistics on empty international freight transport.

Accordingly, as outlined by Table 1, for the EU as a whole (including the UK), the additional CO2 emissions resulting from the proposed changes in cabotage regulations would amount to about 4 million tonnes – which according to statistics for Germany’s energy sector, equals the annual CO2 emissions of 3 to 4 medium-sized hard-coal-fired powerplants.

Table 1: Additional CO2 emissions resulting from tighter cabotage regulations incl. cooling-off periods

Eurostat data also show that Germany is the country where almost half of EU cabotage was observed in 2017. Therefore, the largest part of the additional CO2 would be emitted in Germany. This is because of Germany’s role as a transit country, connecting Eastern European countries to Western European markets. As outlined by Figure 1, Germany is the country where most of Poland’s (largest cabotage operating country), Romania’s and Bulgaria’s cabotage takes place.

Figure 1: Top 5 cabotage performing countries and their main countries in which cabotage took place in 2017

Conclusion and recommendation

The free movement of services – as actually required by the Single Market – is today an empty phrase. The current cabotage regulations (from 2009) explicitly discriminate EU citizens that come from certain EU countries (de facto discrimination by passport). Only the complete removal of restrictions on cabotage operations in the EU will be compatible with the Union’s Single Market policies, which seek for non-discrimination.

The existing cabotage regulations already cause thousands of empty trailers on European streets and are harmful to the environment. The recently proposed rules would even worsen the current situation, causing CO2 emissions to rise significantly. Only the complete removal of restrictions on cabotage operations will be compatible with the Union’s climate and environmental policies, and otherwise undermine the credibility of the EU as an accountable lawmaker.