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The document discusses the current policy approach to reducing transport-related air pollution in the EU, which has largely followed a regulatory approach through product standards and rules to meet air quality standards. It notes that while effective, this approach has limitations given the significant variations in causes and effects of air pollution across different regions and cities in Europe. Economic instruments could provide more flexibility to address this differentiation. Specifically, the document examines alternatives like adjusting taxes on fuels and vehicles to better reflect their environmental performance to further internalize the costs of air pollution.