Diesel technology and the associated environmental burden of local and global pollutant emissions have long been the focus of environmental policy debates. This article considers various negative external effects resulting from the use of combustion engines. A number of economic policy instruments can help to reduce these effects in the long term, such as the introduction of an urban road pricing scheme that is linked to local pollution levels, a greater focus on CO2 abatement in the sectors included in the EU Emissions Trading Scheme (EU ETS), or the integration of the transport sector into the EU ETS.