COBALT studied the internalisation of external costs, with a focus on rail corridors, modal shift and the effects of several internalisation schemes on transport. In the first step two ERTMS corridors were chosen for the case study. In a second step, the marginal and average external costs of the relevant modes were estimated for both the corridors as for the countries involved. Next, an overview of possible policy tools for internalisation was made and 2 policy scenarios were constructed. The impacts of these policy packages were calculated with the help of TRANS-TOOLS and TREMOVE. The rail input data for these models was updated to the year 2005 with the help of data collected especially for this project.