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Roads to Reform: How Transport Found Its Way into the EU Carbon Market

Tait, Adam LU (2025) MVEM31 20251
Centre for Environmental and Climate Science (CEC)
Abstract
This thesis examines why road transport was initially excluded from the EU Emissions Trading System (EU ETS) and what factors contributed to its later inclusion in the EU ETS 2. This thesis will examine how environmental, economic, and political factors contributed to the shift in policy through the lens of the theories of liberal Intergovernmentalism (LI) and neofunctionalism. The research uses a qualitative design and offers a dual-theoretical explanation of the evolving dynamics in EU climate governance. It draws on semi-structured expert interviews, a systematic literature review, and a thematic analysis of academic sources.
The initial exclusion of road transport is best understood through Li, which highlights national governments’... (More)
This thesis examines why road transport was initially excluded from the EU Emissions Trading System (EU ETS) and what factors contributed to its later inclusion in the EU ETS 2. This thesis will examine how environmental, economic, and political factors contributed to the shift in policy through the lens of the theories of liberal Intergovernmentalism (LI) and neofunctionalism. The research uses a qualitative design and offers a dual-theoretical explanation of the evolving dynamics in EU climate governance. It draws on semi-structured expert interviews, a systematic literature review, and a thematic analysis of academic sources.
The initial exclusion of road transport is best understood through Li, which highlights national governments’ resistance due to political sensitivity, economic costs, and distributional concerns. Rising fuel prices, public backlash, and administrative complexity made carbon pricing in transport a politically risky proposition. At the same time, neofunctionalism offers insight into the European Commission’s early strategic deferral, showing how supranational actors initially avoided politically contentious sectors.
Over time, however, functional pressures, institutional learning, and growing climate urgency renewed momentum for integration. Including road transport in ETS 2 reflects a convergence of supranational leadership, evolving policy norms, and national compromise. The Social Climate Fund (SCF) and the creation of a separate trading system illustrate how interstate bargaining and social equity concerns influenced the final design. The findings from this research paper highlight that a theoretical approach combining two theories is recommended to explain how the EU both promotes and limits climate policy integration.
Ultimately, this thesis highlights that incorporating road transport into the carbon trading system has been a gradual process, marked by debates stemming from diverse national interests within the EU, varying EU-level goals, and shifting public opinion, which has evolved over time. This highlights a broader challenge for the EU and its climate agenda, which involves incorporating aspects of carbon market expansion in a manner that is perceived as both fair for the people living in the union and successful as a vital tool to help reach the EU’s ultimate goal of climate neutrality by 2050. (Less)
Popular Abstract (Swedish)
Vägar till Reform: Hur Transport Hittade Sin Väg in i EU:s Koldioxidmarknad

EU:s utsläppshandelssystem har länge undvikit att inkludera vägtransport, trots att den står för en betydande del av Europas koldioxidutsläpp. Detta är förvånande, eftersom klimatkrisen kräver insatser från alla sektorer. Mitt masterarbete undersöker varför vägtransporten ursprungligen exkluderades, vilka utmaningar det medförde och vilka politiska, ekonomiska och miljömässiga faktorer som till slut ledde till att sektorn fick en plats i EU:s koldioxidmarknad. Studien visar också hur förändringen påverkar EU:s möjligheter att nå sina klimatmål och vad det kan betyda för framtidens klimatpolitik.
Att minska koldioxidutsläppen från transportsektorn är en av de... (More)
Vägar till Reform: Hur Transport Hittade Sin Väg in i EU:s Koldioxidmarknad

EU:s utsläppshandelssystem har länge undvikit att inkludera vägtransport, trots att den står för en betydande del av Europas koldioxidutsläpp. Detta är förvånande, eftersom klimatkrisen kräver insatser från alla sektorer. Mitt masterarbete undersöker varför vägtransporten ursprungligen exkluderades, vilka utmaningar det medförde och vilka politiska, ekonomiska och miljömässiga faktorer som till slut ledde till att sektorn fick en plats i EU:s koldioxidmarknad. Studien visar också hur förändringen påverkar EU:s möjligheter att nå sina klimatmål och vad det kan betyda för framtidens klimatpolitik.
Att minska koldioxidutsläppen från transportsektorn är en av de största klimatutmaningarna i Europa. När EU lanserade sitt utsläppshandelssystem (EU ETS) 2005 valde man dock att utesluta vägtransport, en sektor med komplexa reglerings- och mätproblem. Min studie undersöker varför vägtransporten först hölls utanför och vilka politiska, ekonomiska och miljömässiga faktorer som senare bidrog till att sektorn inkluderades i den reviderade versionen av systemet, EU ETS 2.
Problemet som adresseras är hur klimatpolitik kan utformas för att inkludera svårreglerade sektorer utan att orsaka orimliga ekonomiska eller sociala effekter. Det är relevant eftersom transportsektorns utsläpp fortsätter att öka och måste tas med i den övergripande klimatstrategin för att EU ska nå sina klimatmål.
Resultaten visar att förändringen var möjlig tack vare en kombination av ökat miljömedvetande, tekniska framsteg inom utsläppsmätning, och politiska kompromisser mellan medlemsländer med olika intressen. En överraskande detalj är hur starkt civilsamhällets påtryckningar och normer bidrog till att skapa ett politiskt klimat för förändring, något som ofta underskattas i klimatpolitiska analyser.
Metodmässigt har jag använt en kvalitativ analys av politiska dokument och intervjuer med experter inom EU:s klimatpolitik för att belysa beslutsprocessen bakom inkluderingen av vägtransport i EU ETS.
Min studie kan hjälpa beslutsfattare och forskare att förstå hur komplexa och ibland oväntade faktorer formar stora klimatpolitiska reformer. Den ger också vägledning för hur liknande utmaningar kan hanteras i framtiden, både inom EU och globalt. (Less)
Please use this url to cite or link to this publication:
author
Tait, Adam LU
supervisor
organization
course
MVEM31 20251
year
type
H2 - Master's Degree (Two Years)
subject
keywords
EU ETS, EU ETS 2, Road transport, Liberal Intergovernmentalism, Neofunctionalism
language
English
id
9209609
date added to LUP
2025-09-01 09:32:58
date last changed
2025-09-01 09:32:58
@misc{9209609,
  abstract     = {{This thesis examines why road transport was initially excluded from the EU Emissions Trading System (EU ETS) and what factors contributed to its later inclusion in the EU ETS 2. This thesis will examine how environmental, economic, and political factors contributed to the shift in policy through the lens of the theories of liberal Intergovernmentalism (LI) and neofunctionalism. The research uses a qualitative design and offers a dual-theoretical explanation of the evolving dynamics in EU climate governance. It draws on semi-structured expert interviews, a systematic literature review, and a thematic analysis of academic sources.
The initial exclusion of road transport is best understood through Li, which highlights national governments’ resistance due to political sensitivity, economic costs, and distributional concerns. Rising fuel prices, public backlash, and administrative complexity made carbon pricing in transport a politically risky proposition. At the same time, neofunctionalism offers insight into the European Commission’s early strategic deferral, showing how supranational actors initially avoided politically contentious sectors.
Over time, however, functional pressures, institutional learning, and growing climate urgency renewed momentum for integration. Including road transport in ETS 2 reflects a convergence of supranational leadership, evolving policy norms, and national compromise. The Social Climate Fund (SCF) and the creation of a separate trading system illustrate how interstate bargaining and social equity concerns influenced the final design. The findings from this research paper highlight that a theoretical approach combining two theories is recommended to explain how the EU both promotes and limits climate policy integration. 
Ultimately, this thesis highlights that incorporating road transport into the carbon trading system has been a gradual process, marked by debates stemming from diverse national interests within the EU, varying EU-level goals, and shifting public opinion, which has evolved over time. This highlights a broader challenge for the EU and its climate agenda, which involves incorporating aspects of carbon market expansion in a manner that is perceived as both fair for the people living in the union and successful as a vital tool to help reach the EU’s ultimate goal of climate neutrality by 2050.}},
  author       = {{Tait, Adam}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Roads to Reform: How Transport Found Its Way into the EU Carbon Market}},
  year         = {{2025}},
}