The Future Of Co2 Emissions In Sprawled Urban Areas

Is the pace of technological progress sufficient to deliver a carbon-neutral urban transport system by 2050? To what extent could tax-based policies complement technological progress, and at what social cost? We use a new urban environmental general equilibrium model to evaluate baseline and counterfactual scenarios for the evolution of urban transport CO2 emissions. We simulate the evolution of travel demand, modal split and commuting distance upon the spatial configuration of Auckland, New Zealand, which we use an example of a sprawled urban area. We demonstrate that technological progress will have eliminated only 45% of these emissions by 2050. Taxing carbon and urban congestion could further remove 35% of current CO2 emissions. We argue that carbon and congestion taxes should continuously grow to offset the exacerbating environmental burden and the rebound effects technological progress generates. We also compute the associated welfare costs and highlight the resulting policy trade-off between achieving carbon neutrality and economic efficiency. We outline policies to mitigate that trade-off and discuss ways to secure a societally inclusive and economically efficient transition to carbon neutrality.