Transport infrastructure costs in low-carbon pathways

•Mitigation and macroeconomic role of transport infrastructure modelled using IAM.•Costs of infrastructure deployment for air, road, and public transport introduced.•It is found that baseline model of energy demand in transport sector improved.•Restricting the deployment of transport infrastructure can lower cost of mitigation.

The rate and manner in which transport infrastructure (e.g. roads, railway tracks, airports) is deployed, will play an important role in determining energy demand, greenhouse gas emissions and the economic impact of the transport sector. This paper describes an exercise where the costs of infrastructure deployment for the transport sector have been incorporated into the IMACLIM-R Global E3 IAM. In addition to adding these costs, the modelling of the criteria for the deployment of infrastructure for roads has also been improved. It is found that this model recalibration results in a more accurate baseline as compared to historically observed data (2001-2013) for investments in energy demand, road infrastructure, and passenger kilometers travelled. Regarding macroeconomic effects, it is found that the imposition of a carbon emission trajectory to 2100 cause GDP to decrease relative to the newly calibrated baseline - this is a standard IAM result. However, when the deployment of infrastructure for roads and air travel is further constrained, the GDP loss is less than with a fixed carbon emission trajectory only. This is because early restriction of infrastructure for roads and air travel allows an expansion of public transport infrastructure which is adequate to meet low-carbon transport service demand whereas when less public transport infrastructure is available, more costly mitigation investments must be made in other parts of the economy. This suggests that restricting infrastructure deployment as a complementary policy to carbon pricing, lowers the cost of mitigation.