Transport decarbonisation: a challenge that requires immediate action on both the demand and supply side

On November 22 in Cēsis, at the seminar “Challenges and Solutions for Transport Decarbonisation,” industry experts, entrepreneurs, and municipal representatives concluded that reducing emissions in Latvia’s transport sector is crucial for achieving the country’s climate goals. However, success will only be possible through the comprehensive integration of policy, society, and technological tools.

Associate Professor Aiga Barisa from Riga Technical University presented the CommitClimate simulator – a tool that enables the assessment of current CO₂ emissions and the projection of the impact of various policy scenarios. As the professor noted, the model can also show the total reduction in emissions in tons, providing municipalities with a clear understanding of the consequences of different actions.

The simulator can also visualize possible outcomes if decision-making is delayed or action is postponed, thereby clearly demonstrating the consequences of such delays. Based on a system dynamics modeling approach, the simulator can operate with a minimal amount of input data, as it already integrates national and centralized data. It not only calculates the volume of emissions but also analyzes the impact of policies and other indicators on the final outcome. This tool will help municipalities develop climate neutrality plans, which is especially important in the transport sector, where the impact of emissions is very high, but the lack of data on population mobility and freight logistics makes planning difficult.

SPOTLOG project expert Zane Pīpkalēja pointed out that data-driven decisions are more accurate and spark interest in policymakers more effectively, thereby fostering the implementation of change. She emphasized that municipalities and companies must undergo significant reorganization to adapt to decarbonisation requirements – a necessary but financially demanding process.

During the seminar, Z. Pīpkalēja presented the SPOTLOG project, whose main goal is to develop green and socially responsible logistics systems by reducing carbon emissions and optimizing resource use. The expert stressed that the improvement of regional policy and cross-sectoral cooperation is crucial for the development of sustainable logistics. She highlighted examples of good practices identified in the SPOTLOG project and effective innovations such as digital twin technologies, which help to better plan and analyze transport solutions. Shared mobility services and innovative delivery models can significantly reduce emissions and operational costs. The presentation also noted that within the framework of the project, proposals are being made to improve regional policy instruments to promote carbon-neutral mobility and inclusive logistics. Pīpkalēja particularly emphasized the need to enhance the Vidzeme Planning Region’s development program, focusing on more sustainable urban logistics.

The head of the Sustainability Cluster Latvia, Armands Gūtmanis, emphasized that transport, similar to the building sector, is one of the biggest challenges in implementing climate policy. A. Gūtmanis pointed out that Latvia risks financial sanctions if it fails to meet decarbonisation targets – the costs of not reducing emissions will have to be covered by taxpayers. The expert highlighted the urgent need for high-capacity charging infrastructure for heavy transport, which is a prerequisite for significant changes in this sector, and stressed that the transition to electricity or other alternative fuels will require substantial subsidies. The seminar also raised the issue of proportionality in emission reduction – how many euros are spent to save one ton of CO₂. This discussion is only just beginning, but it is important for shaping economically efficient and sustainable policy.

Justs Dimants, economist and lead researcher at the Sustainability Cluster Latvia, led a discussion-based workshop to foster a meaningful exchange of views among industry representatives. The main goal of the workshop was to identify the key obstacles hindering companies’ progress toward decarbonisation, as well as to model optimal future scenarios by determining the necessary types of tax, subsidy, and infrastructure support. The discussions also analysed the sector’s overall challenges, addressing the situation from both the entrepreneurs’ and policymakers’ perspectives.

Participants evaluated the availability of EU funds and opportunities to attract support, while also proposing ways to improve fund accessibility for businesses. The existing tax policy and potential incentives to encourage companies to shift to low-emission transport were also discussed. Particular attention was devoted to infrastructure development to support the achievement of decarbonisation goals, including an analysis of how the private and public sectors could cooperate more effectively.

As an example of the problems that can arise without sufficient support, participants mentioned a company in a remote region whose fleet of electric vehicles is too small to attract investment for building a charging station. At the same time, the number of vehicles does not increase because the nearest charging stations are too far away – a real situation where one development prerequisite directly hinders the other, creating a vicious circle that slows overall progress.

The discussions also brought forward proposals for improving municipal support mechanisms, including, for example, granting property tax reductions for land on which factories or alternative fuel stations are built.

Participants agreed that for market development it is essential to provide subsidies to stimulate both demand and supply. They proposed introducing an incentive mechanism for municipalities, for example, by increasing state budget allocations from the Municipal Finance Equalization Fund for those municipalities that effectively achieve decarbonisation targets. The groups also agreed that, for instance, in infrastructure development it is necessary to analyse the location and needs of manufacturing and logistics companies, and that businesses could be further encouraged toward decarbonisation through subsidies requiring minimal co-financing from companies. The seminar “Challenges and Solutions for Transport Decarbonisation” was organized by the Vidzeme Planning Region within the framework of the Interreg Europe 2021–2027 project SPOTLOG. The event was co-organized by the CommitClimate project and the Sustainability Cluster Latvia.

Link to the article: Transport Decarbonisation: A Challenge That Requires Immediate Action on Both the Demand and Supply Side – LV Portal