Road transport generates high and growing environmental externalities, specially in terms of CO 2 emissions. The main present strategy of European countries, and of Italy in particular, concentrates on investing large public resources, trying to reverse the modal split, both for freight and for passenger transport, from roads to collective means (railways and buses). While this strategy is reasonable in high density urban areas, and on some corridors, where collective modes can operate with acceptable efficiency, is ineffective where the demand structure is dispersed. A surplus aggregate analysis is provided, showing that the opportunity cost of reducing CO 2 emissions through innovative road vehicles technology is in general far lower than the cost of modal change. Furthermore, there are expected positive windfalls from accelerating these innovations. Finally, the continuing land use dispersion trend confirms the unlikely hood of giving back a dominant role in the future to the collective modes.