Climate change poses two fundamental challenges for the transport sector: transport will have to significantly reduce greenhouse gas (GHG) emissions and it will require investment in order to adapt to impacts of climate change. The scale and scope of emission reductions sought by policy makers are daunting but there is much that can still be achieved within the transport sector at low cost - especially against a background of high energy prices. Governments will deploy many policies simultaneously and can avoid unnecessary costs if transport sector GHG mitigation is planned on the basis of marginal abatement costs and focuses on the most cost?effective actions. Success will depend on action across several fronts encompassing technology, fuels, and travel behaviour - regional circumstances will play an important role in determining the allocation of effort. Industry will require clear, consistent and durable signals to guide low?carbon innovation and households will require similar guidance regarding purchase decisions, travel and settlement patterns. Technological innovation has the potential to deliver larger emission reductions on a much faster track than changes in travel and settlement patterns.