4. Non-urban passenger transport: A pivotal sector for greening transport

Non-urban transport refers to all transport activity outside urban areas. Its two main components are regional and intercity travel. Regional travel is domestic transport activity that includes peri-urban and rural travel. Intercity travel encompasses trips between urban areas, whether domestic or international. In ITF’s modelling framework, the available modes for intercity travel are road (car, bus, and motorcycle), rail, air, and ferry. For regional travel, the options are only road and rail transport. Non-urban passenger transport is responsible for 34% of all transport emissions and 60% of passenger transport CO2 emissions. Its total emissions in 2015 amounted to 2 482 million tonnes of CO2 from 32 trillion passenger-kilometres travelled.

The fight to lower emissions from passenger transport will be won or lost in the non-urban sector. Regional and intercity transport is highly reliant on fossil fuels. Overall non-urban passenger activity and therefore emissions are likely to continue to grow, rebounding from a sharp reduction due to the Covid-19 pandemic. ITF projections for 2050 show that non-urban passenger activity could more than double and emissions increase by as much as 25%, even if growth will not be as strong as expected before the pandemic due to lingering economic impacts on demand.

The pandemic reduced non-urban passenger transport demand by more than a third in 2020. The travel restrictions and strict lockdowns imposed in response to the crisis reduced demand for regional and intercity travel by an estimated 38% in 2020 compared to pre-pandemic projections. The impact has been heavier on international travel than on domestic trips. This fall in demand has also led to a significant reduction in CO2 emissions. However, this drop is likely to remain temporary: In all three scenarios modelled, non-urban travel will recover rapidly from the impact of Covid-19.

Ambitious policies could drive down CO2 emissions from regional and intercity transport by 57% to 1 070 million tonnes in 2050 compared to 2015  

More stringent policies could lock in decarbonising gains from the pandemic and help curb CO2 emissions for non-urban transport. Ambitious policies could drive down CO2 emissions from regional and intercity transport by 57% to 1 070 million tonnes in 2050 compared to 2015 in the Reshape+ scenario. Recovery from the pandemic could become a catalyst for decarbonising regional and intercity travel. Policy makers should take this opportunity to design recovery plans that will also accelerate climate change mitigation.

Equity considerations need to be addressed when considering economic, environmental, and social trade-offs in making non-urban transport more sustainable. Reducing transport emissions cannot come at the price of leaving the less affluent behind. For example, tax refunds and similar incentives for purchasing electric vehicles do not benefit all consumers equally, as the less wealthy will not be able to afford them even with rebates. Similarly, carbon taxes are regressive and hit low-income groups harder. Transport policy should seek to avoid such unequal outcomes.

Non-urban passenger transport is one of the most challenging transport sectors to decarbonise. It often involves long distances and lower passenger numbers, making it difficult to apply many of the decarbonisation solutions in other settings. Aviation, in particular, currently has no commercially viable alternative energy options. Much of rail transport has no tailpipe emissions but requires expensive infrastructure and high load factors to justify the investment. Availability of recharging points and the limited range of batteries remain obstacles to the broader adoption of electric vehicles for long-distance travel. Vehicles using alternative fuels such as hydrogen face similar challenges. Nonetheless, ambitious new measures, infrastructure developments, and technological innovations can help the sector to decarbonise.

The traditional approach to meet increasing travel demand has been to add to boost capacity with new infrastructure. This has increased congestion, harmed air quality, and increased CO2 emissions. A better approach to meet growing transport demand in sustainable ways is known as "Avoid-Shift-Improve". This paradigm aims to reduce congestion, emissions and energy consumption as well as improving air quality while providing travellers with greater accessibility.

Avoid policies aim to reduce the need to travel or induce shorter trips. Within cities, land-use planning integrated with transport planning can achieve this. Non-urban travel does not typically present such opportunities. Nonetheless, the Covid-19 pandemic demonstrated that many business trips could be entirely avoided and replaced by teleconferencing. Similarly, the pandemic led to a growth in local tourism could reduce holiday-makers' trip distances. Such temporary changes in travel patterns due to Covid-19 could become more permanent if promoted by the tourism industry and businesses.

Shift policies seek to improve the carbon footprint of trips by transitioning to cleaner alternatives, such as travelling by rail rather than aircraft. In the case of non-urban transport, avoid and shift go hand in hand since reducing the length of a trip also allows switching to a cleaner mode.

Improve policies aim to increase energy efficiency and to enhance environmental performance via technological upgrades. In aviation, this includes cleaner aircraft technology and the use of sustainable aviation fuel. In road transport, engine and conventional powertrain developments and technologies for vehicle mass reduction could improve the fuel efficiency of vehicles.

Aviation has embraced the need to reduce its emissions. The International Civil Aviation Organization (ICAO) has adopted a new aircraft CO2 emissions standard (ICAO, 2017[1]). ICAO is also implementing the Carbon Offsetting and Reduction Scheme for International Aviation, known as CORSIA (ICAO, 2016[2]). Under CORSIA, aircraft operators will collectively offset CO2 emissions that exceed a threshold based on the average level of CO2 emissions in 2019/2020. CORSIA will become mandatory in 2026, following a trial phase between 2021 and 2023 and a voluntary phase between 2024 and 2026. A few exceptions will be made, for instance for least-developed countries. Following the massive reduction in demand caused by the Covid-19 pandemic, CORSIA has been amended to use CO2 emissions in 2019 as a base barring a swift recovery from the pandemic, CORSIA contributions will likely remain limited in its first years.

Rapid growth in air travel has outpaced significant environmental gains in aviation as newer, more fuel-efficient aircraft took to the skies. Before the hiatus caused by the pandemic in 2020, airline passenger traffic increased at a compound annual growth rate of about 6.5% between 2010 and 2019 (6% for domestic, 6.8% for international), according to data from ICAO (2020[3]). Aviation will become the leading mode of travel in the intercity segment by 2050, growing by almost 210% compared to 2015.

The benefits and consequences of flying are inequitably distributed. One percent of the world population generates 50% of CO2 emissions from commercial aviation (Gössling and Humpe, 2020[4]). While this small group is responsible for a large share of aviation emissions, the adverse effects are borne by all. The study also showed that close to 50% of global air transport occurs in North America and Europe, followed by the Asia-Pacific region (32%). The remaining world accounts for only 19% of air transport but is home to a much larger share of the world population. The fall in emissions from aviation due to Covid-19 can be an opportunity for policy makers to make the sector more equitable by shifting more of the environmental costs to frequent flyers.

Rail is often considered the cleanest non-urban transport mode, but electrification needs to continue. This has been a priority for many governments worldwide, yet the task is far from complete (UIC, 2019[5]). Significant progress has been achieved in Europe, the region with the most intercity rail activity globally. In other world regions much remains to be done. Furthermore, rail travel's lifecycle emissions, including those associated with rail infrastructure, need to be accounted for (IEA, 2019[6]).

Road vehicles have the greatest potential to decarbonise but face significant obstacles. Cars and motorcycles have been the subject of a technological revolution during the past decade, with hybrid-electric and electric engines replacing internal combustion engines (IEA, 2020[7]). Progress is still slow because of the low sales share of cleaner vehicles. Non-urban transport presents two main challenges for electric vehicles: driving range and charging infrastructure. The driving range of electric vehicles is still much shorter than that of conventional vehicles, and rapid-charging infrastructure is scarce outside cities. Charging infrastructure is being installed along main intercity corridors. But until other roads also have them, electric vehicles' usability in non-urban transport will be limited. Strategic placement of such infrastructure is thus necessary for the faster adoption of electric vehicles (Wang et al., 2019[8]; Xie et al., 2018[9]). The same limitations exist for electrified bus travel, which faces even more significant challenges. Other clean fuels for road vehicles, such as hydrogen, show promise but require substantial investments in research and development as well as broader acceptance from users.

Regional transport is slow to decarbonise. Services connecting citizens in rural areas face similar challenges to road and rail links between cities. However, the smaller passenger flows make infrastructure development expensive and less likely. Vehicle fleets in rural regions also tend to be older and less fuel-efficient than those in urban areas.

The Covid-19 pandemic has disrupted mobility everywhere, but especially non-urban passenger transport. Border closures, stay-at-home orders, and quarantine requirements for international arrivals created unheard-of barriers to citizens' mobility. The ITF model for non-urban passenger transport has been adapted to account for these changes to calculate demand for regional and intercity travel and the associated and emissions for 2020. The results were validated against empirical data, where possible. Compared with pre-pandemic projections of non-urban passenger demand in 2020, they show a significant decline in travel of around 40% (measured in passenger-kilometres). Some transport modes experienced more significant drops than others, all saw a reduction of at least 30%, according to these estimates.

The decline in air travel was particularly steep. Passenger numbers for aviation plunged by 60% in 2020, the biggest year-to-year drop ever observed (ICAO, 2021[15]). International air travel fell by 75%. Domestic aviation was less affected, but passenger numbers still halved. Border closures and quarantine on international arrivals were the main factors, but fear and uncertainty also put many people off travelling (UNWTO, 2020[16]). A lack of universal guidelines also reduced the willingness to fly.

Aviation was particularly exposed to shifting regional peaks and troughs of the pandemic. By its nature, international air travel was highly vulnerable to the fact that different waves of the pandemic struck different parts of the world at different times, and that countries reacted with different responses. As a result, passenger demand for air travel came to a virtual standstill in April 2020, falling by 94% compared to April 2019 (IATA, 2020[17]). Some restrictions on travel and quarantine were lifted slowly in the following months, and some flight activity resumed, mainly on domestic routes. Several countries created temporary international travel corridors through air bubble agreements. An air bubble is an arrangement between two or more countries under which airlines can operate international flights between them with few or no restrictions. The aim behind such agreements is to safely resume air passenger services while regular international flights are suspended due to the pandemic.

Rail travel was affected disproportionately by the pandemic. Overall surface transport activity slumped by 32% compared to ITF's pre-pandemic projections. Rail and bus require travellers to share space with others and became particularly unpopular in the pandemic. Private road transport, on the other hand, offering relative protection against the virus, saw a more limited decline. Exact numbers on the global demand reduction for private cars do not exist; the ITF estimates the drop at about 30%. The numbers of vehicles passing through toll roads offer some insights. Various toll operators in the United States recorded 25-50% fewer cars throughout the pandemic (SmartBrief, 2020[18]). In India, the National Highway Authority estimated in May 2020 that the national lockdown during that spring would lead to a 17% reduction in intercity highway traffic for the year (CRISIL, 2020[19]). The actual reduction is likely to be more significant as states imposed their own rules and restrictions in the following months.

Intercity rail carried significantly fewer passenger in 2020 compared to 2019. According to the United Kingdom's Office of Rail and Road,35 million passenger rail journeys were made between April and June 2020 – a mere 6.4% of the journeys in the same period in 2019 and the lowest level recorded since the mid-19th century (ORR, 2020[20]). Data from Washington State in the United States show similar trends in intercity rail travel. On the day a stay-at-home order was issued, passenger rail services had 95% fewer users than on the same day in 2019 (WSDOT, 2020[21]). The order was lifted in June 2020, but on 1 January 2021, ridership was still 90% less than the same day a year before.

The demand for intercity bus travel has seen a large drop due to the pandemic, with bus activity falling by 36%, according to ITF estimates. Actual data is difficult to obtain, as the bus sector is less regulated and more fragmented than aviation or rail. New vehicle registrations provide some insights, however. In Western Europe, coach registrations fell by 82% between April and June 2020, compared to the same period in 2019. In individual countries, the numbers range from a 69% reduction in France to 92% in Belgium (Sustainable Bus, 2020[22]). Beyond reduced demand from bus operators, factory closures likely also played a role, however.

Less travel resulted in lower CO2 emissions in 2020. Evidence suggests that the fall in emissions during the pandemic will be temporary. Some preliminary reports show a significant drop. In the United States, CO2 emissions from the transport sector fell by 15% (Rhodium Group, 2021[28]). ITF estimates a drop of 36% in CO2 emissions for non-urban passenger travel.

If policies continue on the pre-pandemic pathway, CO2 emissions from non-urban passenger transport will rise by 45% between 2020 and 2025  

Travel in regions and between cities emitted substantially less CO2 in 2020, but this drop was temporary. The ITF estimates that CO2 emissions from non-urban passenger transport fell by 36% in 2020. Overall, the reduction may well have been more significant than in other areas of the transport sector given the particularly dramatic fall in aviation activity. It will remain almost inconsequential to climate goals, however, unless decisive policy actions follow. If policies continue on the pre-pandemic pathway (the ITF Recover scenario), total CO2 emissions from non-urban passenger transport will rise by 45% between 2020 and 2025.

Covid-19 could lead to positive changes in the way we travel and work. These changes could further reduce emissions from non-urban passenger transport with the right policy support. Many businesses remained profitable and productive by embracing information and communication technology solutions and cutting business travel during the pandemic. Similarly, changes in international leisure tourism could also lead to major emission reductions as local options gain popularity.

Some business travel could be replaced by teleconferencing and virtual meetings. This could lead to long-term business trip reductions, especially in air travel, currently the highest emitter of CO2. At the end of July 2020, flights booked by corporations were down 97% from a year earlier (Sindreu, 2020[29]). The reduction in business travel will remain temporary unless policies support this change to make it permanent. Changes in working culture (for instance increased teleworking and teleconferencing) or changes in business models (such as diversifying or compressing of global supply chains and the growth of digital businesses and e-commerce) may help curb emissions in the long term (OECD, 2020[30]). Fewer business trips, however, do not automatically translate into fewer emissions. Provided a minimum load factor is maintained, airlines would likely continue to serve routes at a similar frequency. This is expected to lead to an increase in economy fares, to maintain airline profitability.

Long-distance leisure tourism could shift to more travel closer to home. In mid-2020, while tourism made a temporary recovery, many people chose to travel to domestic or nearby destinations. This was due to safety concerns and travel restrictions. It was also due to promotions and advertisements to travel locally (Forbes, 2020[31]). Policies that boost such behavioural changes could reduce long-distance passenger travel by 15-22% by 2030, depending on the region.

Rebound in travel not out of the question. It is also possible that there will be a significant rebound. If people consider travelling safe again, they might overcompensate for the year of restrictions. One such example is the flights-to-nowhere that have appeared in some parts of the world (The New York Times, 2020[32]). While the impact of these flights is minimal globally, it shows that many people are looking forward to being able to travel again. This might cause a spike in non-urban activity and consequently CO2 emissions.

The pandemic reduced the popularity of bus and rail travel. While the pandemic could lead to sustained reductions in emissions from aviation, the same cannot be said for road and rail transport. The need for physical distancing reduced the popularity of bus and rail transport, with private vehicles a viable alternative for some. This short-term adaptation could become permanent. Increased travel in privately owned vehicles could dent the drive to decarbonise non-urban passenger travel. Restoring the confidence of travellers in bus and rail will be crucial to decarbonisation once the pandemic ends.

The pandemic could speed up the retirement of older aircraft. Ageing aircraft not only have higher operating costs but also have higher fuel consumption. The reduction in demand caused by the spread of Covid-19 has led to the permanent grounding of some older aircraft. This has not only happened due to Covid-19. Similar periods of low demand, such as the 2008 financial crisis and the 9/11 attacks, also resulted in early retirements as well as mergers in the industry (Russell, 2020[33]). Air France, for example, initially planned to retire its Airbus A380s by 2022, but it announced in May 2020 that it would immediately retire its entire A380 fleet. This will be replaced by the smaller Airbus A350 and Boeing 787 aircraft, which have a smaller environmental footprint (Air France KLM Group, 2020[34]). The pandemic could act as a catalyst for airlines moving to more modern and less polluting aircraft. The policies devised in the aftermath of Covid-19 should support technological innovations to reduce the CO2 emissions from the aviation industry (ITF, 2020[35]).

Table 4.1 gives an overview of the short-term and long-term impacts of Covid-19 that may act as challenges or opportunities in the drive to decarbonise non-urban passenger transport.

The pandemic has spurred aircraft fuel efficiency and more direct routes. While air travel recovers, fewer aircraft are required to cover the demand. The older, less fuel-efficient aircraft remain grounded. Even when demand reaches pre-pandemic levels, airline fleets will consist of newer, more fuel-efficient planes currently under construction. Likewise, a smaller number of aircraft in operation reduces congestion. This allows flights to minimise detours and fly more direct routes. As traffic returns to pre-pandemic levels, the latter gain may be short-lived.

Financial recovery after Covid-19 can support the transition to cleaner transport. If carbon pricing remains low, the stimulus packages designed by governments will turn out to be less environmentally effective. Governments could take recovery as an opportunity to encourage investment in low carbon alternatives for transport infrastructure. Carbon pricing can be used for that purpose. It can also provide revenue to balance public finances. The Aviation Tax Tool developed by the Transport & Environment advocacy group calculates the potential revenue and the avoided emissions if a country or a group of countries applies taxes on jet fuels. The tools show that starting in 2021 if taxes were applied in the EU and the United Kingdom at the rate of EUR 0.33 per litre of kerosene, it would avoid 99.3 million tonnes of CO2 emissions over 2021-2030 and raise EU 7.2 billion in revenues in 2021 (Bannon, 2020[36]).

Recovery packages and bailouts need to bind airlines to environmental goals. The Covid-19 pandemic provides opportunities for governments to attach climate conditions to the bailout packages offered to the airlines. Several governments have done so. France's bailout of Air France-KLM requires that the carrier reduce its domestic flights by 40%, particularly short-haul routes where train-travel alternatives take less than two-and-a-half hours (Cirium, 2020[37]). The country's overall aerospace-sector aid package has set aside EUR 1.5 billion for research and the development of cleaner aircraft; a carbon-neutral plane by 2035 (Morgan, 2020[38]). Similarly, in Austria, the bailout requires Deutsche Lufthansa AG to impose minimum ticket prices and add extra fees on shorter routes to discourage avoidable flights (Schwarz-Goerlich, 2020[39]). More governments could similarly design aviation bailout packages, turning the crisis into an opportunity to reduce the threat of climate change.

Enhanced safety, sanitation and flexibility are central to encourage the return of passengers to bus and rail travel. As demand recovers after the pandemic, governments will need to prioritise measures to ensure that passengers feel confident choosing more sustainable shared long-distance travel options. Communicating safety protocols and sanitisation procedures will help consumers feel safer sharing spaces with other travellers. Introducing additional digital services that analyse travel data and identify lower demand times for travel during the day will help individuals travel more safely on mass transport. Additionally, dynamic pricing and collaboration between operators may help. Flexible booking options could also be used to increase the attractiveness of bus and rail compared to private cars.

Decarbonising private vehicles is key to decarbonising non-urban passenger travel. A large share of non-urban travel is by private vehicle. The use of electric vehicles has been lower in non-urban travel due to their low range and the limited availability of charging points. Policies and investments to address this can be part of economic recovery plans to support both decarbonisation and the economy. Germany, Spain, Austria, Italy and France all have recovery packages that include special concessions for electric vehicles for the consumers (Bundesamt für Wirtschaft und Ausfuhrkontrolle, 2020[40]) (Service-Public.fr, 2020[41]). The impact of such incentives has already been felt. Sales of battery-electric and plug-in hybrid electric vehicles in Western Europe have more than doubled in 2020, while sales of gasoline and diesel cars have plummeted (The New York Times, 2021[42]).

Economic stimulus packages prioritising decarbonisation of transport could help strengthen the pace of economic recovery after Covid-19. Manufacturing incentives coupled with tax benefits for the consumer can accelerate demand for electric vehicles. In the short term, maintaining policy requirements for clean mobility would help to reduce risks to existing investments in e-mobility. Continuing exemptions could also offer advantages for stakeholders waiting on the sidelines. In the long term, e-mobility, like other energy efficiency enhancements, can improve economic productivity by reducing travel costs and driving innovation (ITF, 2020[43]).

This section explores potential development paths for regional and intercity mobility to 2050. It is based on three different scenarios: Recover, Reshape, and Reshape+. These scenarios represent increasingly ambitious efforts by policy makers to reduce CO2 emissions and decarbonise regional and intercity transport. The definition of policies within these scenarios was based on ITF research, input from experts in the form of a policy scenario survey disseminated to policy experts from all regions of the world in early 2020, and from ITF workshops held for projects under the ITF Decarbonisation Initiative in 2020. Table 4.3 details the assumed uptake of the measures for each scenario. All three include the same baseline economic assumptions to reflect the impact of the Covid-19 pandemic: a five-year delay in GDP and trade projections compared to pre-Covid-19 levels.

The scenarios are based on the ITF Non-Urban Passenger Transport Model, which simulates the development of transport activity, mode shares, and CO2 emissions for intercity and regional transport to 2050 from the base year 2015. Box 4.3 offers a detailed description of the ITF non-urban passenger transport model and changes to previous versions.

In the Recover scenario, pre-pandemic thinking in terms of policies, investment priorities and technologies shapes non-urban passenger transport in the coming decade. Governments prioritise and reinforce primarily established economic activities to bolster the recovery. The main objective is the return to a pre-pandemic "normal". Recover is a more ambitious version of the Current Ambition scenario in the ITF Transport Outlook 2019.

Technological progress for the non-urban road vehicle fleet is moderate. Overall, vehicle fleets and fuel-efficiency standards in regional and intercity travel follow the IEA's Stated Policies Scenario (STEPS) assumptions (IEA, 2020[44]). Hybrid-electric and battery-electric vehicles become more common outside cities, but their use is still limited. Vehicle sharing increases but remains marginal for non-urban travel.

Conventional and high-speed rail projects currently under construction or planned are completed. Governments also invest in service improvements, which leads to increased frequencies and an improved offer for passengers.

There is no quick breakthrough in the decarbonisation of aviation. Aircraft fuel-efficiency improves in line with past trends, albeit reinforced by the retiring of older, more polluting aircraft. Technological step changes such as all-electric aircraft or wide use of synthetic aviation fuel occur only towards mid-century. Hybrid aircraft with electricity-assisted jet propulsion start to appear by 2030 and represent a small but significant share of (mostly domestic) aviation by 2050. Peoples' propensity to fly falls slightly in some regions, primarily due to environmental concerns.

Carbon pricing is gradually implemented across all transport modes, reaching USD 150-250 per tonne of CO2 by 2050. In aviation, moderate ticket taxes are introduced, and the use of sustainable aviation fuel mandated. Developed regions make more use of these mechanisms than other world regions. Finally, the liberalisation of air travel ("open skies") follows pre-pandemic trends, while better airspace management enables aircraft to use more efficient flight paths.

In the Reshape scenario, the impacts of Covid-19 on non-urban passenger transport also gradually disappear by 2030, as under Recover. Reshape differs in that policy makers set ambitious climate goals and implement stringent policies in their pursuit. Also, these more ambitious policies are put in place worldwide, not only regionally. Reshape is a more ambitious version of the High Ambition scenario in the ITF Transport Outlook 2019.

Government policies make non-urban travel less attractive by adding to cost, particularly in aviation. Carbon prices reach USD 300-500 in 2050. Similarly, higher ticket taxes of up to 30% is set for air travel. The use of sustainable aviation fuel increases due to the adoption of strict fuel mandate standards but also adds to costs.

Electrification of non-urban surface travel makes progress. The higher share of low-emission vehicles in the fleet makes regional and intercity travel more sustainable; it also minimises the impact of carbon-pricing policies. Electrification and fuel efficiency of surface vehicles improve in line with IEA's Sustainable Development Scenario (SDS) assumptions (IEA, 2020[45]).

Shared travel gains more traction in a non-urban setting, taking a bigger share of total activity.

Heavy public and private investment in rail transport improves infrastructure, service and operating speed. New ultra-high-speed rail lines (Maglev) further boost demand for intercity rail.

The decarbonisation of aviation picks up speed. The fuel efficiency of aircraft increases faster following an accelerated adoption of new aircraft designs. Government support for research and development lowers the cost of synthetic aviation fuels and all-electric aircraft. Technological advances allow the deployment of hybrid planes with higher battery capacity compared to the Recover scenario. A propensity to fly falls further, with people all over the world reducing their air travel. As aviation's carbon footprint falls towards mid-century, this trend loses in importance.

In the Reshape+ scenario, positive decarbonisation trends from the pandemic are locked in through policies that lead to permanent change. As in the other two scenarios, the negative impacts of Covid-19 on non-urban passenger transport are overcome by 2030. As in the Reshape scenario, governments set ambitious decarbonisation targets and implement policies that can deliver them. However, governments seize opportunities for decarbonisation that emerged during the pandemic. By aligning economic stimuli with climate and equity objectives, they leverage economic recovery for environmental and social sustainability.

Several exogenous trends shape non-urban transport under the Reshape scenario. Long-distance tourism decreases, for example, as holiday-makers choose nearer destinations and thus to shorter-distance travel. Teleconferencing remains common practice after the pandemic, reducing the need for business travel. These trends are positive effects of the pandemic. Yet, in a comprehensive analysis, it is hard to argue that they are entirely positive, as they correlate strongly with the difficult economic situation of countries and individuals. They do, however, have a supporting effect on the decarbonisation efforts of the non-urban passenger sector.

Fuel mandates are strict. In many countries, eligibility for Covid-19 support packages is tied to the mandatory use of a minimum share of sustainable fuels, notably for aviation. This accelerates the widespread use of alternative fuels.

Governments earmark Covid-19 recovery funds for rail infrastructure investments, which accelerates improvements in frequency and operating speed for regional and intercity services. It also creates more alternatives to air travel for longer-distance trips, both national and international.

Covid-19 stimulus packages target the decarbonisation of road transport. Subsidies and other benefits for electric and other low-emission vehicles remain in place for longer. Additional funds enable the roll-out of charging infrastructure in more regions, supporting a faster and increased penetration of non-urban travel with electric and low-emission vehicles. By 2050, Reshape+ assumes that their share grows 1-5% extra compared to the Reshape assumptions.

Non-urban passenger transport demand, measured in passenger-kilometres, is the sum of regional (peri-urban and rural) and intercity transport. In 2015, demand was around 32 trillion passenger-kilometres, with a little more than half of travel (54%) taking place between cities and the rest in the regional segment. The share of non-urban passenger transport is projected to fall slightly over the next three decades, from 61% of all passenger activity in 2015 to 56% by 2050.

In absolute terms, non-urban passenger activity should more than double by 2050 compared to 2015. In the Recover scenario, it grows by 114% and under Reshape 107%. Reshape+ will limit demand growth by an extra four percentage points to 103%, aided by policies that encourage teleconferencing and leisure tourism in nearby destinations to continue after the pandemic.

Regional transport and aviation grow strongest in all three scenarios, especially international aviation (Figure 4.2). Demand for surface modes linking cities will remain relatively stable. Recover policies would reduce demand for surface intercity transport both in absolute and relative terms, primarily due to carbon pricing. In Reshape and Reshape+, improved vehicle technologies, electrification, and carbon-pricing policies reverse this trend. Population growth and the economy affect both regional and intercity movements, while the availability of transport infrastructure and the supply and cost of travel primarily impact the intercity segment.

Under the assumptions of Recover, non-urban passenger transport activity will reach almost 70 trillion passenger-kilometres in 2050, with an almost even split between intercity and regional. The Recover scenario assumes that policy makers and stakeholders adopt measures and policies intending to return to a pre-pandemic "normal". That, however, cannot be reached without additional actions. Regional demand grows faster, increasing by 150% compared with 80% for intercity travel. Despite continuing urbanisation, the non-urban population will grow in absolute numbers and generate transport activity. However, hardly any policies target regional travel; in contrast with the intercity segment, where various measures are directly or indirectly reducing demand.

The policies adopted in the Reshape scenario curb the growth of regional travel slightly. The more ambitious policies reduce the growth of regional activity by 1ercentage points in 2050, with demand for regional transport growing by 2.5 trillion passenger-kilometres less than under Recover policies. In contrast, demand for intercity travel stays almost the same as in Recover. The modal composition of Reshape is different, however, with "greener" modes playing a more prominent role.

The implementation of Reshape+ policies reduces the growth of intercity travel. Under the assumptions of Reshape+, demand for intercity travel increases by 1.6% annually, for a total increase of 74%, seven percentage points less than Recover and Reshape. This is the consequence of a more pronounced drop in business travel and long-distance leisure tourism, aided by slightly higher fuel mandates, which increase the cost of air travel and further suppress demand. On the other hand, demand for regional travel has a similar growth as in Reshape.

Aviation becomes the main transport mode for intercity travel under all three scenarios. In 2015, cars (and motorcycles) generated more passenger-kilometres than aviation, with a 44% share compared with 40% for aviation. Bus and rail had smaller shares with 12% and 3% respectively. In all three scenarios, aviation recovers the losses from the 2020 Covid-19 pandemic quite quickly, establishing its dominance in the intercity market by 2030, with 50% of the total mode share in Recover, 45% in Reshape and 42% in Reshape+.

Demand for intercity travel grows considerably in the Recover scenario, led by aviation. Overall, demand is set to grow by 1.7% annually for a total increase of 81% by 2050. Aviation represents a massive 69% of the total intercity activity in passenger-kilometres. Compared to 2015, aviation demand more than triples in 2050, reaching almost 21.6 trillion passenger-kilometres. The policies implemented under Recover are unable to reign in the growth of aviation and especially international air travel.

Recover demonstrates how low levels of pricing mechanisms such as carbon pricing or ticket taxes will not significantly alter the growth path of air travel, especially if the world economy recovers from the pandemic as assumed. The improved fuel efficiency of new aircraft reduces airfares and counters the imposed extra costs. International aviation is the primary driver of growth, with a compound annual growth rate of 3.6%. This growth assumes that the pandemic does not affect future Open Skies agreements.

Surface transport in regions and between cities shifts towards rail. Road transport becomes less important in the intercity segment, with only 21% of the mode share in 2050. Private vehicles make up 12%, with the remaining 9% covered by bus. The share of intercity rail increases, reaching 9% by 2050, buoyed by its reliance on electricity. It is not affected by carbon-pricing mechanisms, while the slow adoption of electric road vehicles means road travel becomes more expensive over time.

The right policies can keep rising aviation demand in check. Under the more ambitious policies in Reshape, especially the ones that increase the cost of emitted carbon and flights in general, aviation grows 36 percentage points less by 2050 than under Recover assumptions. Nevertheless, aviation still grows significantly, by 172%. The reduction effect is more evident in domestic aviation, which grows with a compound annual growth rate of 2% under Reshape compared to 2.5% in Recover. International aviation also grows slower, but the difference between the two scenarios is smaller, with 3.3% growth in Reshape versus a 3.6% increase under Recover. Overall, intercity demand in Reshape in 2050 is 81% higher than the base year, one percentage point less than Recover.

Forgone aviation growth under Reshape policies is shared between the surface modes. Private road transport demand still declines both in share and absolute passenger-kilometres representing only 17% of total passenger-kilometres by 2050. Intercity rail sees significant increases, growing more than five times compared to 2015. In 2050, rail represents 11% of all intercity activity. Bus demand remains stable, growing slightly in absolute numbers but reducing in share. The main factors behind this shift are the increased presence of low- and zero-emission road vehicles and the rail infrastructure developments in Reshape are. As carbon-free mobility becomes widespread, the effect of carbon-pricing mechanisms on surface transport is smaller.

Reshape+ policies and changes further reduce the growth of air travel. Aviation growth is a further 21 percentage points lower in Reshape+ compared to Reshape, and 57 percentage points lower than Recover. Despite this relative containment, demand for air travel is still more than 2.5 times higher in 2050 than in the base year 2015, growing at an annual compound rate of 2.7% (1.9% for domestic and 3% for international aviation). Aviation thus covers 59% of all passenger-kilometres even under Reshape+ conditions, with 20% remaining for private road vehicles, 11% for buses, and 10% for rail.

Ferry passenger transport does not play a significant role in any scenario. Ferry services are common only in the few region with many islands located close to each other and calm seas. Most of the ferry activity in the modelling results comes from the European Economic Area (which includes island-rich coastal states such as Norway, Sweden or Croatia) and Turkey.

Commercial electric aviation develops in all three scenarios. Both hybrid-electric and all-electric aircraft come into use due to the technological developments and policies assumed in the three scenarios (see Box 4.1 for details). Hybrid-electric aircraft enter the market in 2030 in all cases, but with different levels of penetration. All-electric aircraft become commercially viable towards mid-century. Domestic routes and short international connections see earlier and more widespread use of electric aircraft regardless of scenario, due to the constraints posed by aircraft size and weight.

One in five flight routes will use some hybrid-electric aircraft within the next decade in the Recover scenario. While hybrid aircraft will operate on 18% of air links by 2030, only 0.6% of aviation demand will be covered by hybrid planes' electric propulsion in that year.1 By 2050, three out of five routes see some part of the activity carried out with hybrid-electric planes. Still, electricity provides only 8% of the total demand in passenger-kilometres 40 years from today under Recover policies. All-electric aircraft appear only in 2045 and by 2050 are used only on 3% of all routes, corresponding to 0.8% of all total aviation activity.

Airlines switch to hybrid-electric aircraft faster because of higher carbon prices and reduced energy costs in Reshape. Hybrid-electric aircraft fly on a higher share of routes by 2030, but their share in terms of passenger-kilometres is still only 1.7%. Higher battery capacity and lower weight favour the adoption of hybrid-electric aircraft in the two following decades. By 2050, the electric component of hybrid-electric aircraft powers 14% of all aviation passenger-kilometres under Reshape conditions. Hybrid-electric aircraft operate on 85% of all short- and medium-haul routes, which corresponds to almost two-thirds of all flights. All-electric aircraft have greater range limitations than hybrids and are used only on 7% of all routes, serving 2.6% of the total demand. There is no significant difference concerning hybrid-electric and all-electric aircraft between Reshape and Reshape+ as the policy environment is the same in both. Long-lasting Covid-19 impacts reduce overall demand for air travel. This leads to lower hybrid-electric and all-electric aviation numbers in absolute terms but similar in shares.

Regional transport grows faster than intercity travel. As regional transport services, rural areas and areas surrounding urban agglomerations (peri-urban), private road vehicles, buses, and rail are the only available modes. Regional movements represent the daily movements of the people living in the area, so they depend highly on GDP and population changes. In Recover, regional passenger-kilometres grow by 152% between 2015 and 2050. Private road vehicles represent 39% of those, four percentage points lower than the base year. Rail activity grows significantly, tripling in absolute numbers and reaching 42% in 2050 from 34% in 2015. Bus travel, on the other hand, drops to 19%, from 23%.

Under Reshape, the use of private cars for regional mobility recedes further. The share of private road vehicles drops a further two percentage points in the face of more ambitious decarbonisation policies, reaching 37% in 2050. Rail transport is less affected by carbon prices and caters for this demand, increasing its mode share to 44%. Total regional demand grows 15 percentage points less to 2050 under Reshape compared to Recover. Regional transport outcomes in Reshape+ are similar to Reshape, as the assumed trends and policy changes do not significantly affect regional travel.

The global centre of gravity in transport activity is shifting. Most non-urban transport activity happened in OECD countries in the past. Over the past decade, this has started to change, and by 2050, a reversal of roles will happen. In 2015, the OECD’s mostly developed nations accounted for 51% of all non-urban activity despite being home to only 20% of the world's population. By 2050, 67% of non-urban travel will occur in non-OECD nations. Of all world regions, Asia generated the most demand for non-urban transport in 2015, followed by the United States and Canada region, and the European Economic Area (EEA) and Turkey region. At the other end of the spectrum, Sub-Saharan Africa, Transition countries, and OECD Pacific were the world regions with the lowest non-urban transport activity in 2015. Transition economies include countries of the former Soviet Union and non-EU south-eastern European countries. OECD Pacific countries are Japan, South Korea, Australia and New Zealand. This shift continues through to 2050. In all three scenarios, non-urban transport grows strongest in Sub-Saharan Africa, the Middle East-North Africa (MENA) region and Asia. In the Recover scenario, demand in Asia will triple by 2050. The assumptions of the other two scenarios slightly reduce this growth, but Asia remains the biggest player.

Most OECD regions will see lower growth in regional and intercity travel. The lowest growth rates will occur in the United States and Canada, the EEA and Turkey and in the OECD Pacific. Overall, growth in the Reshape and Reshape+ scenarios is lower for all regions than in Recover, regardless of economic development. The United States and Canada region is the only one that defies this trend. In Recover, it has the second-lowest growth of transport activity behind the region of EEA and Turkey. In Reshape, however, the United States and Canada is the only region that has more activity than in Recover. This happens due to the planned and announced high-speed rail (HSR) projects of the region. These investments could increase non-urban transport activity more than in any other region.

Regional and intercity travel develops differently in OECD and non-OECD countries. Regional transport represents daily activity such as commuting or shopping trips. These trips are less affected by GDP growth in developed economies such as the OECD’s compared to emerging or developing countries. The population covered under this segment also remains relatively stable or even decreases for most OECD countries. As a result, the total regional activity remains steady. Non-urban passenger demand growth in OECD countries thus comes primarily from intercity transport. The growing populations and economies of non-OECD countries, by contrast, will see massive growth in both regional and intercity transport activity.

The most non-urban travel per person by far takes place in the United States and Canada. In this region, an average person travelled nine times as much as the average individual in Asia in 2015 (see Figure 4.5). The United States and Canada are both large countries; in both, most economic activity takes place on opposite sides of the country, generating considerable travel demand. Furthermore, their strong economic interdependence with the world and their geographic location implies that most international movements require crossing oceans. The EEA and Turkey region is a distant second in terms of per capita non-urban travel. Most of the other regions have a similar level of per capita demand. The only exception is Sub-Saharan Africa, where the average distance travelled by a person is significantly lower compared to all other regions. OECD Pacific is an interesting case, as it contains a mix of densely and sparsely populated, prosperous countries. They should produce low and high values of non-urban per-capita activity respectively, effectively cancelling each other out. Furthermore, the economic development of these countries would suggest high per capita values, but the geographically isolated countries included in this region, limit the number of international trips taken per person.

Per capita non-urban travel in passenger-kilometres increases in all three scenarios. In Recover, regional and intercity transport activity grows strongest in absolute terms for most regions. The only exception is the United States and Canada region, where activity grows more on a per-capita basis in the Reshape+ scenario. The biggest relative growth occurs in Asia. Sub-Saharan Africa and the Transition regions also grow considerably in all three scenarios. The EEA and Turkey and the United States and Canada regions grow the least in all three scenarios, relative to 2015 levels.

Non-urban passenger transport is at a crossroad. There are two possible paths ahead: one where emissions continue to grow in line with GDP, and one where the link between economic growth and emissions is severed. Despite the decline in non-urban transport and associated emissions as a result of the Covid-19 pandemic, the ITF simulations suggest that non-urban passenger emissions will rise again in the Recover scenario. Despite efficiency gains made on a per-kilometre basis, projected increases in demand far outpace these gains. Under Reshape and Reshape+, emissions could be drastically lower in 2050 than in 2015.

Non-urban passenger transport generated 2 482 million tonnes CO2 in 2015. This represents 7.7% of all fuel-burn CO2 emissions and 34% of all transport emissions. Of those, 70% were generated by road and rail, split evenly between regional and intercity travel. Aviation, both domestic and international, emitted 725 million tonnes of CO2.

Emissions from non-urban travel rise by 25% if governments return to pre-pandemic policies as assumed in the Recover scenario. Regional transport and international aviation are the biggest CO2 emitters, with 35% and 41% respectively by 2050. The rise in emissions is linked to growing demand, as decarbonising policies prove to be unsuccessful in curbing emissions. International aviation emissions grow almost in line with demand, reaching 1 300 million tonnes CO2, a three-fold increase. This is far from the goal set by the aviation sector to reach 50% of 2005 emissions in 2050 (ATAG, 2019[46]), which would be a reduction of around 200 million tonnes of CO2. Domestic aviation benefits more from the hybridisation of aircraft and increases by only 70%. As aviation becomes the main intercity travel mode, demand for surface modes will reduce. This fall in demand, combined with the increased fuel efficiency of surface vehicles, leads to a significant drop in emissions. Regional transport, on the other hand, will experience significant growth in demand, which leads to increased emissions. The emissions described for the Recover scenario are not a product of the absence of mitigation policies but rather what is expected under the current policies and measures. Further actions will be required from stakeholders to achieve even these targets.

Accelerated technological progress and the wider use of electricity in aviation reduce emissions under Reshape. By 2050, non-urban passenger emissions fall by 55% compared to 2015. International aviation is the only segment where emissions grow compared to 2015, namely by 14%. Short- and medium-haul flights use hybrid-electric or all-electric planes almost exclusively, reducing domestic aviation emissions by 50%. Similarly, surface transport, both in the intercity and regional segments, benefits from the higher mode share of rail and the increased use of hybrid and electric vehicles on the road. The two segments combined produce 73% less CO2 in 2050 compared to 2015.

Reshape+ policies further accelerate emission reductions. In 2050, total non-urban passenger transport CO2 emissions would be 57% less than in 2015 under Reshape+. The difference between Reshape and Reshape+ in 2050 stems almost exclusively from international aviation, which in Reshape+ remains close to 2015 levels, increasing only by 4%. Domestic aviation emissions are also slightly lower under Reshape+, with two percentage points less than in Reshape. The reduction in aviation CO2 emissions between the two scenarios comes from the reduced propensity of business travellers and long-distance leisure tourists to fly, as well as from the strengthened fuel mandates for aviation. Intercity surface transport is projected to reduce its CO2 emissions by 87% compared to 2015.

Upstream emissions play an important role in decarbonisation as fuel and electricity production is energy-intensive. These well-to-tank emissions accounted for 920 million tonnes of CO2 in 2015, a time when most non-urban passenger transport relied on hydrocarbon fuels. These emissions are a combination of two main elements: the transportation of liquid fuels to consumption points and the emissions created from electricity production. These elements differ by country, year, and scenario.

The well-to-tank component becomes a larger share of total transport emissions. Well-to-tank emissions were responsible for 27% of total non-urban passenger transport emissions in 2015. Under a Recover scenario, this share remains stable throughout the next 30 years. But with more ambitious policies, as in Reshape and Reshape+, the share of well-to tank emissions reaches almost 50%. As the nature of transport emissions shifts and is shaped more by upstream factors, close collaboration between the transport and energy sectors will be increasingly critical for effective climate change mitigation.

The source of upstream emissions shifts from production and transport of fuel to production and transport of electricity. Well-to-tank emissions in 2015 stem almost entirely from the production and transport of fuels to their final consumption points. This is the case both for surface transport and aviation, with the biggest share of well-to-tank emissions in 2015 coming from the former. Regional and intercity surface activity taken together are responsible for 80% of the total upstream emissions of non-urban transport. Under the assumptions of the Recover scenario, a majority of well-to-tank emissions will come from the production and transport of electricity, and even more so with Reshape and Reshape+ policies.

The lion’s share of non-urban passenger CO2 emissions came from OECD countries in 2015. This also means these countries have the biggest potential to decarbonise. Two regions produced almost 55% of all well-to-tank CO2 emissions, namely the United States and Canada region on the one hand and the EEA and Turkey region on the other. Asia generated only 22% of these emissions, despite having the largest population.

Different transport modes account for the highest non-urban travel emissions in the different regions. The OECD Pacific region, comprised mostly of island nations, is the only region where aviation produces a majority of emissions. In the Transition countries, aviation produces more emissions than other modes, but less than 50%. This is probably due to the region’s size and the increased use of rail. Road transport is the main driver of CO2 emissions in all other regions. This is particularly true for the United States and Canada region and South-Saharan Africa, where private road vehicles, bus, train, and ferry services generate around 80% of the total.

Recover is the only scenario in which non-urban transport emissions rise by 2050. Emissions grow in all but two regions, the United States and Canada and EEA and Turkey. These two generated the bulk of CO2 emissions in 2015. They are two of the most economically developed regions and as such benefit the most from the increased efficiency and electrification of the surface vehicle fleets combined with the decarbonisation of the energy sector. All other regions register higher emissions in 2050, especially Asia, MENA, and Sub-Saharan Africa. The latter sees the biggest relative growth with almost four times the 2015 value, while Asia records the biggest growth in absolute terms, with nearly 475 million tonnes CO2 more.

Reshape and Reshape+ policies reduce CO2 emissions from non-urban travel across all regions. In Reshape, the United States and Canada region and the EEA and Turkey region also register the biggest reductions. Pricing measures (carbon pricing, ticket taxes, etc.) are stricter in those regions and therefore shift demand more strongly to sustainable modes, favouring among other things the uptake of hybrid-electric aircraft. Emissions fall to 25% of the 2015 level. Sub-Saharan Africa is the only region that experiences growth in non-urban CO2 emissions. The biggest reduction in absolute terms comes from the United States and Canada region, which reduce their projected WTW CO2 emissions by 720 million tonnes. Reshape+ has similar numbers to Reshape, with all emission figures being slightly lower.

Travel patterns and emissions shift in all three scenarios. In 2050, aviation will be responsible for the majority of CO2 emissions in all regions, with the exceptions of Asia and Sub-Saharan Africa. Emissions from Asia are evenly split between air and surface transport in the Recover scenario. In the other two scenarios, improved technologies and more ambitious policies shift the majority of emissions to the aviation sector. By contrast, Sub-Saharan Africa has an almost even split between air and surface transport in Reshape and Reshape+, whereas surface transport produces almost 60% of all non-urban emissions in Recover.

Wealthier world regions have much higher per capita CO2 emissions as a result of more passenger-kilometres travelled. In 2015, the average inhabitant of the United States and Canada produced over 2.5 tonnes of well-to-wheel CO2 emissions from non-urban passenger transport. An average inhabitant of EEA and Turkey generated almost 700 kg and citizens of OECD Pacific 430 kg. At the bottom end, the average inhabitant of Sub-Saharan Africa produced only 72 kg of CO2 and Asians 140 kg.

The difference between regions is much higher in CO2 emissions per capita than in passenger-kilometres. For example, in 2015, an average person in the United States and Canada travelled nine times more kilometres than an average person in Asia. In terms of CO2 emissions, the difference between both is more than double: the North American traveller emitted 19 times the CO2 of the Asian. This results from high volumes of non-urban activity by air and car in one region and rail and bus in the other. While this is one of the more extreme examples, similar discrepancies exist between most regions.

In Recover, average per capita emissions grow in most regions. The two exceptions are the regions that had the highest emissions in 2015, the United States and Canada and EEA and Turkey. These regions reduce per capita emissions due to existing and planned rail infrastructure investments. Also, their high-income levels allow people to switch to lower-emission private vehicles. The lower growth of transport activity in those regions plays an important role as well. Other regions are unable to decouple activity from emissions. There, emissions grow on a per capita basis, most of all in Asia, the Transition countries and Sub-Saharan Africa.

Reshape and Reshape+ policies reduce per capita emissions from non-urban travel worldwide. The drop is more pronounced in economically developed regions. In Reshape, the EEA and Turkey region manages to reduce per capita emissions to 17 kg of CO2, below those from OECD Pacific and MENA (225 kg and 190 kg respectively), primarily because of its high connectivity with surface modes. The biggest drop, both in absolute and relative terms, happens in the United States and Canada, even if this region still has the highest per capita emissions of around 0.5 tonnes CO2 annually. As road transport and the energy sector decarbonise, the biggest share of emissions comes from air transport, even if aviation is much less carbon-intensive than in 2015.

Transport can be a catalyst for promoting social inclusion and well-being. Transport policies, including decarbonisation policies, impact equity by influencing accessibility and the distribution of costs and benefits between populations. They can influence the economic and social outcomes of individuals. It is vital to align economic, climate change and well-being goals. Covid-19 has had a drastic impact on mobility and hence on access to essentials such as jobs, services, and social networks. During the pandemic, car owners had a clear accessibility advantage over those reliant on other forms of transport. While shorter distances can be covered by walking or cycling, regional and intercity travel for low-income households was gravely disrupted. Even without a pandemic, the affordability of different modes of transport dictates the travel patterns of people. Lower-income households are less able to fly or use high-speed rail. They often depend on bus services and, in certain regions, trains for their non-urban travel needs.

Policy makers should protect and promote more efficient and affordable long-distance travel services. Transport providers are reeling from the financial losses of the pandemic. They are facing high operating costs and low user numbers. Policy makers will need to deal with funding shortfalls. Bailouts have been granted for aviation, but bus operators that serve lower-income travellers will also need government assistance to maintain service.

Transport projects often benefit more mobile travellers. In a traditional cost-benefit analysis of transport schemes, the value of travel time saved accounts for the majority of estimated benefit to users. Yet travel time savings offer benefit to groups that are already highly mobile but are less likely to provide benefits to groups with restricted mobility, such as non-drivers, the elderly, low-income households or the disabled. (Lucas, Tyler and Christodoulou, 2009[47]).

Transport policy decisions must balance environmental and social goals. Sustainable transport planning often requires trade-offs between the economy, environment, and social justice. Substantial attention has been paid to trade-offs between economic development and the environment, as well as economic development and social equity. Interest in striking the right balance between environmental and equity goals has been much less pronounced. The trade-off between these two goals is often referred to as environmental justice (Mitchell, 2005[48]).Policies focussing on decarbonising the transport sector should entail an equitable implementation of measures. Environmental justice strives to ensure that the negative impact of transport decisions on health and the environment does not fall disproportionately on minorities and lower-income groups (Forkenbrock and Schweitzer, 1999[49]).

Advances in sustainable transport can offer benefits to all. Governments worldwide have focused on promoting electric vehicles to cut transport emissions. Despite incentives, electric vehicles will continue to be more expensive than equivalent internal combustion engine vehicles for the next four to six years (Soulopoulos, 2019[50]). Their high price makes them unaffordable for many consumers. Policy makers must ensure that environmental progress in transport does not leave anyone behind. Tax credits and other fiscal incentives to encourage the use of electric vehicles are often available equally to all consumers, regardless of income levels. This results in uneven social benefits. The social benefits of electric vehicles include increased energy security as well as reduced emissions of GHGs. While the social benefits of increased energy security are shared nationally, the benefits of improved air quality are more unevenly distributed (Skerlos and Winebrake, 2010[51]). If the tax credit for purchasing electric vehicles is adjusted by income level, it would increase adoption among lower-income groups and also lead to a more equal distribution of the social benefits of their adoption.

Improving shared vehicle fleets and charging infrastructure offers benefits to all. In the aftermath of Covid-19, recovery measures that encourage sales of low emission vehicles and investment in charging infrastructure should focus on shared rather than private fleets to achieve environmental and equity goals (Buckle et al., 2020[52]; Goetz, 2020[53]). Future transport will be shaped by shared, autonomous, and electric vehicles. The private sector will largely drive that change. Given the public and private benefits of that change, policy makers must ensure social equity is a priority for both the public and private sectors.

Pricing mechanisms employed to promote the reduction of emissions can have adverse equity impacts. The equity effects of carbon taxes have been a subject of discussion since their conception as a policy instrument. Carbon taxes affect the cost of travel and lead to changes in passenger demand, mode choice and the flow of traffic on road networks. These are significant when it comes to low-carbon road transport (ITF, 2020[54]). However, theoretically, and empirically, carbon taxes and energy taxes are regressive and can cause inequity by affecting low-income groups relatively more than high-income groups. While there is strong evidence that carbon taxes contribute to mitigation of carbon emissions, the uptake of carbon pricing as an instrument to reduce emissions has been slow and hesitant. This can be traced to the opposition faced by carbon taxes due to their regressive distributional impacts (Büchs, Bardsley and Duwe, 2011[55]).

Lower-income groups bear the brunt of regressive taxation. Carbon taxes affect non-urban passenger transport more than other instruments because they are often determined and applied nationally. The regressive distribution impacts arise due to different reactions to a uniform policy that stem from differences in income, living conditions, consumption preferences and patterns, and different socio-economic groups (Liang, Wang and Wei, 2013[56]). Even if they are unlikely to be frequent flyers, lower incomes groups could bear a heavier burden of such taxes than higher incomes groups, depending on the alternatives available to them. How the revenues generated by carbon taxes are used can play a big role in ensuring that the burden on lower-income groups is reduced or eliminated.

A distributional impact analysis before adopting a carbon tax will highlight areas for concern as well as areas where equity impacts are perceived but not significant. For example, pricing measures on flights. Only a small share of the population takes a majority of flights. In the United States, 12% of the population took six or more flights in 2016, accounting for 68% of flights (Rutherford, 2019[57]). In England, only 1% of residents took almost 20% of international flights, and 10% took over half (Kommenda, 2019[58]). Across 26 EU countries, carbon footprints associated with air travel rise with expenditure and income (Ivanova and Wood, 2020[59]). Therefore, targeting flights with pricing mechanisms shifts the costs onto those responsible for the emissions, and are not likely to be regressive.

Carbon taxes can be implemented without negative distributional impacts. Successful examples have complemented the tax with preferential measures that safeguard lower-income groups from bearing the burden of the tax. These measures can be applied in different forms. Sweden, for example, reduced the income tax rate as it increased the levy on energy products (Speck, 1999[60]). In Denmark, the revenue generated from the carbon tax could be used by other sectors as labour subsidies or energy-saving investment (Wei et al., 2008). It is essential for policy makers to keep in mind such distributional impacts and the possible steps to avoid them. Revenue can be recycled to groups or individuals through direct transfers and subsidies. Exemptions and lower tax rates for specific groups can be offered from the outset. All these measures directly impact the effectiveness of carbon taxes.

Annual per capita non-urban transport activity grows in all three tested scenarios, as seen earlier in this chapter. Growing per capita activity does not in itself mean that the situation becomes more equitable. An evaluation of equity impacts must examine the distribution of activity across regions. The Gini coefficient is an indicator that tests the distribution of income. A value of one means that all the income is concentrated in a single individual, while a value of zero means that income is evenly distributed across all individuals. A similar process is used to examine the per capita passenger-kilometres in the regions. In 2015, the Gini coefficient is 0.47. In 2050, it is lower for all three scenarios: 0.36 in Recover, 0.38 in Reshape, and 0.39 in Reshape+. Reshape and Reshape+, both assume more costly policies and measures that increase the cost of travel. Such increases affect regions with lower economic capabilities more. Therefore, the gap between per capita demand for travel between regions narrows between 2015 and 2050, but the pricing mechanisms in Reshape and Reshape+ mean they decrease less than in Recover.

Per capita CO2 emissions from non-urban transport are more unevenly distributed across regions compared to per capita passenger-kilometres in 2015. The Gini coefficient for the base year is 0.52, compared to 0.47 for passenger-kilometres. The coefficient decreases in 2050 for all three scenarios, to approximately 0.35. However, in contrast with passenger-kilometres, Reshape is slightly more equitable. This is a result of the high impact decarbonising policies can have in the high-emitting regions.

Non-urban transport is an overlooked step-child of climate policy. Regional and intercity travel is responsible for more than one-third of all transport emissions and more than half of total passenger transport CO2 emissions. Without addressing the carbon footprint of a growing number of rural commuters, city hoppers or tourists, it will be difficult to contain climate change.

The Covid-19 pandemic has temporarily reduced emissions from non-urban passenger transport, particularly from aviation. But regional and intercity transport is set to rebound and to at least double by 2050. Its emissions will increase by a quarter if the policies currently in the pipeline will not change.

A shift in policy would pave the way to more sustainable non-urban transport. Its emissions can be brought down by more than half over the next three decades if the decarbonisation windfall of the Covid-19 pandemic can be locked in. Making investment into decarbonisation a priority of economic recovery programmes will put non-urban transport on the right path. The following recommendations detail essential steps on that path.

Governments can tax the use of carbon and increase levies on transport options that are currently under low-tax regimes or exempt from taxes. For international transport, these pricing mechanisms need to be applied based on both the country of origin and destination. This will minimise loopholes and help ensure money raised can be used to decarbonise transport. The increased cost of travel may reduce demand marginally if alternative transport options do not exist and enable a change in behaviour. A price on transport carbon will also drive the availability of greener alternatives, however - for example by making blend-in aviation fuel or electric aircraft more attractive and encouraging other measures that make existing modes more sustainable and also affordable.

Beyond pricing carbon nationally, governments should aim to conclude bilateral or multilateral agreements on pricing mechanisms for international aviation. Introducing effective carbon pricing will require tough negotiations and encounter opposition. However, the cost of not acting will be much higher than the cost of implementing penalties for high-carbon transport and promoting low-carbon alternatives.

Economic stimulus packages for Covid-19 recovery should contain environmental conditions that support sustainable transport. Governments need to privilege the manufacturing and use of electric vehicles over petrol and diesel vehicles. Such incentives could specifically target large vehicle fleets used in shared and public transport in the non-urban segment. This would extend the benefits of low-emission vehicles beyond cities and owners of private vehicles.

Bailouts for transport operators can be conditional on meeting certain climate-related goals. There are applications of this across the entire transport ecosystem, but some more specific examples for non-urban passenger transport include the following. Improvement in intercity and regional rail services frequency and operating quality. Incentivising bus and taxi operators to switch to low or zero-emission vehicles. Requiring airlines to limit short-haul flights to encourage rail travel. Finally, governments and enterprises could nudge employees to travel by rail on business, rather than fly or drive.

Low- or zero-carbon transport is not possible without clean energy, and therefore without the decarbonising the energy sector. Recovery packages that focus on greening the electricity grid and improving battery technologies are vital to comprehensively decarbonise transport. A green grid is critical, as an ever-increasing part of non-urban transport will rely on electricity. Electric road vehicles, further rail electrification and hybridisation of aircraft will all play a part in reaching decarbonisation goals and rely on clean electricity.

Encouraging the adoption of alternative fuels in aviation would reduce emissions in the short term and encourage innovation over the longer term. Initially, a certain share of alternative fuel would come from sustainable sources, either as biofuel or as synthetic fuel from sustainable sources. Fuel mandates would stimulate innovation and adoption of new sustainable aviation fuel in the future, providing further incentives for improving aircraft efficiency. Such a measure would have direct and indirect impact on the cost of flying, which could reduce demand.

Purchase subsidies, tax rebates and exemptions can ensure electric and other low-emission vehicles, become more affordable and interesting for consumers. The higher initial cost of low-emission vehicles and the lack of charging infrastructure are deterrents for potential users especially outside cities. Investing in rapid charging infrastructure along intercity routes would help to establish electric vehicles as a reliable longer-distance travel option. The public sector can lead by example by equipping public vehicle fleets with low-emission vehicles and making more public charging points available. Funding for research and development of cleaner vehicles and fuel technologies should be stepped up to help reduce costs and improve performance.

Policies to encourage the uptake of new vehicle and fuel technologies will not help decarbonisation efforts if the technological developments are not available at a wide enough scale to meet demand. Significant investments should be made in research and development of new technologies in existing and new industries to meet demand and fast-track adoption. These include developing new biofuels, designing more efficient aircraft, and increasing capacity while decreasing costs of batteries. The human capital necessary for these developments will need to be cultivated and planned for in advance.


[34] Air France KLM Group (2020), Phase-out of Air France entire Airbus A380 fleet, https://www.airfranceklm.com/en/phase-out-air-france-entire-airbus-a380-fleet (accessed on 16 October 2020).

[46] ATAG (2019), AVIATION 2050 GOAL AND THE PARIS AGREEMENT, https://aviationbenefits.org/media/166838/fact-sheet_4_aviation-2050-and-paris-agreement.pdf (accessed on 7 December 2020).

[36] Bannon, E. (2020), New tax tool calculates impact of ending aviation’s ‘nonsense’ exemption, Transport and Envronment News, https://www.transportenvironment.org/news/new-tax-tool-calculates-impact-ending-aviation’s-‘nonsense’-exemption (accessed on 16 October 2020).

[55] Büchs, M., N. Bardsley and S. Duwe (2011), “Who bears the brunt? Distributional effects of climate change mitigation policies”, Critical Social Policy, Vol. 31/2, pp. 285-307, http://dx.doi.org/10.1177/0261018310396036.

[52] Buckle, S. et al. (2020), Draft discussion paper: Addressing the COVID and climate crises: potential economic recovery pathways and their implications for climate change mitigation, NDCs and broader socio-economic goals.

[40] Bundesamt für Wirtschaft und Ausfuhrkontrolle (2020), Erhöhter Umweltbonus für E-Autos, https://www.bafa.de/SharedDocs/Kurzmeldungen/DE/Energie/Elektromobilitaet/2020_erhoehter_umweltbonus.html (accessed on 17 October 2020).

[37] Cirium (2020), French government sets green conditions for Air France bailout, https://www.flightglobal.com/strategy/french-government-sets-green-conditions-for-air-france-bailout/138160.article (accessed on 16 October 2020).

[19] CRISIL (2020), Taking a toll, https://www.crisil.com/content/dam/crisil/our-analysis/reports/Research/documents/2020/05/taking-a-toll.pdf (accessed on 26 January 2021).

[31] Forbes (2020), Inside The $20 Billion Fight To Save France’s Battered Tourism Industry, https://www.forbes.com/sites/chrisobrien/2020/07/06/france-tourism-inside-20-billion-fight-save-battered-industry/?sh=4d6ee8e44732 (accessed on 26 January 2021).

[49] Forkenbrock, D. and L. Schweitzer (1999), “Environmental Justice in Transportation Planning”, Journal of the American Planning Association, Vol. 65/1, pp. 96-112, http://dx.doi.org/10.1080/01944369908976036.

[53] Goetz, M. (2020), Policy Brief Electric Vehicle Charging Considerations for Shared, Automated Fleets Introduction and Background, UC Davis Institute of Transportation Studies.

[4] Gössling, S. and A. Humpe (2020), “The global scale, distribution and growth of aviation: Implications for climate change”, Global Environmental Change, Vol. 65/May, http://dx.doi.org/10.1016/j.gloenvcha.2020.102194.

[17] IATA (2020), After April Passenger Demand Trough, First Signals of Uptick, Press Release no: 49, https://www.iata.org/en/pressroom/pr/2020-06-03-01/ (accessed on 6 October 2020).

[15] ICAO (2021), Effects of Novel Coronavirus (COVID19) on Civil Aviation: Economic Impact Analysis, International Civil Aviation Organisation, Montreal, https://www.icao.int/sustainability/Documents/Covid-19/ICAO_coronavirus_Econ_Impact.pdf (accessed on 26 January 2021).

[3] ICAO (2020), Presentation of 2019 Air Transport Statistical Results, International Civil Aviation Organisation, https://www.icao.int/annual-report-2019/Documents/ARC_2019_Air%20Transport%20Statistics.pdf (accessed on 27 January 2021).

[1] ICAO (2017), ICAO Council adopts new CO2 emissions standard for aircraft, https://www.icao.int/newsroom/pages/icao-council-adopts-new-co2-emissions-standard-for-aircraft.aspx (accessed on 19 April 2019).

[2] ICAO (2016), Historic agreement reached to mitigate international aviation emissions, https://www.icao.int/Newsroom/Pages/Historic-agreement-reached-to-mitigate-international-aviation-emissions.aspx (accessed on 19 April 2019).

[7] IEA (2020), Electric Vehicles, International Energy Agency, Paris, https://www.iea.org/reports/electric-vehicles (accessed on 29 January 2021).

[45] IEA (2020), The IEA Mobility Model, International Energy Agency, https://www.iea.org/areas-of-work/programmes-and-partnerships/the-iea-mobility-model (accessed on 8 December 2020).

[44] IEA (2020), World Energy Outlook 2020, International Energy Agency, Paris, https://www.iea.org/reports/world-energy-outlook-2020 (accessed on 9 November 2020).

[6] IEA (2019), The Future of Rail, https://www.iea.org/reports/the-future-of-rail.

[54] ITF (2020), Carbon tax for road vehicles, International Transport Forum, Transport Climate Action Directory, https://www.itf-oecd.org/transport-climate-action-directory-measures?field_type_tid%5B%5D=3187&field_theme_tax_tid%5B%5D=1 (accessed on 5 November 2020).

[43] ITF (2020), Electric Mobility: Taking the Pulse in Times of Coronavirus, International Transport Forum, Paris, https://www.itf-oecd.org/sites/default/files/electric-vehicles-covid-19.pdf (accessed on 5 November 2020).

[35] ITF (2020), Restoring air connectivity under policies to mitigate climate change, International Transport Forum , Paris, https://www.itf-oecd.org/sites/default/files/air-connectivity-covid-19.pdf (accessed on 5 November 2020).

[14] ITF (forthcoming), Decarbonising Air Transport: Acting Now for the Future, OECD/ITF.

[59] Ivanova, D. and R. Wood (2020), “The unequal distribution of household carbon footprints in Europe and its link to sustainability”, Global Sustainability, Vol. 3, http://dx.doi.org/10.1017/sus.2020.12.

[58] Kommenda, N. (2019), 1% of English residents take one-fifth of overseas flights, survey shows, The Guardian, https://www.theguardian.com/environment/2019/sep/25/1-of-english-residents-take-one-fifth-of-overseas-flights-survey-shows (accessed on 5 November 2020).

[56] Liang, Q., Q. Wang and Y. Wei (2013), “Assessing the Distributional Impacts of Carbon Tax among Households across Different Income Groups: The Case of China”, Energy & Environment, Vol. 24/7-8, pp. 1323-1346, http://dx.doi.org/10.1260/0958-305x.24.7-8.1323.

[47] Lucas, K., S. Tyler and G. Christodoulou (2009), “Assessing the ’value’ of new transport initiatives in deprived neighbourhoods in the UK”, Transport Policy, Vol. 16/3, pp. 115-122, http://dx.doi.org/10.1016/j.tranpol.2009.02.004.

[25] McKinsey & Company (2020), The way back: What the world can learn from China’s travel restart after COVID-19, https://www.mckinsey.com/industries/travel-logistics-and-transport-infrastructure/our-insights/the-way-back-what-the-world-can-learn-from-chinas-travel-restart-after-covid-19# (accessed on 16 December 2020).

[27] Mincomercio (2020), Política de turismo sostenible: unidos por la naturaleza, https://www.mincit.gov.co/minturismo/calidad-y-desarrollo-sostenible/politicas-del-sector-turismo/politica-de-turismo-sostenible/politica-de-turismo-sostenible-9.aspx (accessed on 9 February 2021).

[48] Mitchell, G. (2005), “Forecasting environmental equity: Air quality responses to road user charging in Leeds, UK”, Journal of Environmental Management, Vol. 77/3, pp. 212-226, http://dx.doi.org/10.1016/j.jenvman.2005.04.013.

[38] Morgan, S. (2020), France unveils €15bn in aerospace aid, https://www.euractiv.com/section/aerospace/news/france-unveils-e15bn-in-aerospace-aid-sets-green-goals/ (accessed on 16 October 2020).

[30] OECD (2020), “COVID – 19 and the low-carbon transition Impacts and possible policy responses” June.

[24] One Planet Sustainable Tourism Programme (2020), “One planet vision for a responsible recovery of the tourism sector”, https://webunwto.s3.eu-west-1.amazonaws.com/s3fs-public/2020-12/en-brochure-one-planet-vision-responsible-recovery.pdf (accessed on 9 February 2021).

[20] ORR (2020), “Passenger Rail Usage 2020-21 Quarter 1”, Office of Rail and Road October, pp. 1-19, https://dataportal.orr.gov.uk/media/1836/passenger-rail-usage-2020-21-q1.pdf.

[28] Rhodium Group (2021), Preliminary US Greenhouse Gas Emissions Estimates for 2020.

[33] Russell, E. (2020), US airlines could retire older aircraft, focus on newer models due to coronavirus downturn, https://thepointsguy.com/news/us-airlines-fleet-plans-coronavirus/ (accessed on 16 October 2020).

[57] Rutherford, D. (2019), Should you be ashamed of flying? Probably not.*, The International Council on Clean Transportation, https://theicct.org/blog/staff/should-you-be-ashamed-flying-probably-not (accessed on 5 November 2020).

[13] Schäfer, A. et al. (2019), “Technological, economic and environmental prospects of all-electric aircraft”, Nature Energy, Vol. 4/2, http://dx.doi.org/10.1038/s41560-018-0294-x.

[39] Schwarz-Goerlich, A. (2020), Lufthansa’s Austrian arm gets 450 million euro government bailout, https://fr.reuters.com/article/us-health-coronavirus-lufthansa-austrian-idUSKBN23F1EN (accessed on 16 October 2020).

[10] Sehra, A. and W. Whitlow (2004), “Propulsion and power for 21st century aviation”, Progress in Aerospace Sciences, Vol. 40/4-5, http://dx.doi.org/10.1016/j.paerosci.2004.06.003.

[41] Service-Public.fr (2020), Bonus écologique pour un véhicule électrique ou hybride (voiture, vélo...), https://www.service-public.fr/particuliers/vosdroits/F34014 (accessed on 17 October 2020).

[29] Sindreu, J. (2020), A Chunk of Corporate Travel May Be Gone Forever. But How Much?, https://www.wsj.com/articles/a-chunk-of-corporate-travel-may-be-gone-forever-but-how-much-11597155657.

[51] Skerlos, S. and J. Winebrake (2010), “Targeting plug-in hybrid electric vehicle policies to increase social benefits”, Energy Policy, Vol. 38/2, pp. 705-708, http://dx.doi.org/10.1016/j.enpol.2009.11.014.

[18] SmartBrief (2020), Q&A: Coronavirus pandemic takes a toll on tolling industry, https://www.smartbrief.com/original/2020/09/qa-coronavirus-pandemic-takes-toll-tolling-industry (accessed on 26 January 2021).

[50] Soulopoulos, N. (2019), “When Will Electric Vehicles be Cheaper than Conventional Vehicles?”, Bloomberg New Energy Finance, http://NA.

[60] Speck, S. (1999), “Energy and carbon taxes and their distributional implications”, Energy Policy, Vol. 27/11, pp. 659-667, http://dx.doi.org/10.1016/s0301-4215(99)00059-2.

[22] Sustainable Bus (2020), Bus market 2020 in Western Europe: the crisis in figures, https://www.sustainable-bus.com/news/bus-market-2020-in-western-europe-the-figures-registrations/ (accessed on 26 October 2020).

[42] The New York Times (2021), German Automakers Are Charged Up and Ready to Take on Tesla, https://www.nytimes.com/2020/12/31/automobiles/tesla-german-automakers.html?searchResultPosition=2 (accessed on 27 January 2021).

[32] The New York Times (2020), The Flight Goes Nowhere. And It’s Sold Out., https://www.nytimes.com/2020/09/19/travel/airlines-pandemic-flights-to-nowhere.html (accessed on 7 December 2020).

[5] UIC (2019), Railisa UIC Statistics, https://uic-stats.uic.org/ (accessed on 8 December 2020).

[16] UNWTO (2020), UNWTO World Tourism Barometer, https://www.unwto.org/unwto-world-tourism-barometer-data (accessed on 26 January 2021).

[23] UNWTO (2019), Transport-related CO2 Emissions of the Tourism Sector – Modelling Results, World Tourism Organization (UNWTO), http://dx.doi.org/10.18111/9789284416660.

[26] VisitScotland (2020), Tourism Declares a Climate Emergency, https://www.visitscotland.org/news/2020/tourism-declares (accessed on 9 February 2021).

[12] Voskuijl, M., J. van Bogaert and A. Rao (2018), “Analysis and design of hybrid electric regional turboprop aircraft”, CEAS Aeronautical Journal, Vol. 9/1, http://dx.doi.org/10.1007/s13272-017-0272-1.

[8] Wang, C. et al. (2019), “Designing locations and capacities for charging stations to support intercity travel of electric vehicles: An expanded network approach”, Transportation Research Part C: Emerging Technologies, Vol. 102, http://dx.doi.org/10.1016/j.trc.2019.03.013.

[21] WSDOT (2020), Measures showing the effect of COVID-19 on Passenger Rail (Amtrak Cascades), Washington State Department of Transport, https://www.wsdot.wa.gov/about/covid-19-transportation-report/dashboard/rail/default.htm.

[9] Xie, F. et al. (2018), “Long-term strategic planning of inter-city fast charging infrastructure for battery electric vehicles”, Transportation Research Part E: Logistics and Transportation Review, Vol. 109, http://dx.doi.org/10.1016/j.tre.2017.11.014.

[11] Zamboni, J. (2018), A method for the conceptual design of hybrid electric aircraft, Delft University of Technology, http://repository.tudelft.nl/islandora/object/uuid:7b7dc56b-6647-4cc9-98f6-2ed5d488c759/datastream/OBJ/download (accessed on 27 January 2021).


← 1. A simplification is made to display the impact of hybrid-electric aircraft in total aviation demand. The total distance of a trip completed by hybrid electric aircraft is split according to the equivalent distance powered completely by conventional fuel and equivalent distance powered by electricity. The sum is the total trip length. Therefore, the total passenger-kilometres completed by the electric component of a hybrid-electric aircraft can be assessed

Metadata, Legal and Rights

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Extracts from publications may be subject to additional disclaimers, which are set out in the complete version of the publication, available at the link provided.

© OECD/ITF 2021

The use of this work, whether digital or print, is governed by the Terms and Conditions to be found at http://www.oecd.org/termsandconditions.