Thursday, 23 December 2010

FT reviews road charging and makes some useful points

An article in the UK Financial Times (registration required at no charge) reviews road charging, in light of the abolition of the Western extension of London's congestion charging zone this weekend.

It draws a few conclusions that I don't think can be supported by the evidence:

The end of charging in west-central London is one of many signs that sentiment across the industrialised world has turned against efforts to substitute, or supplement, traditional fuel-based taxes on motoring with direct charges.
Is it?  The London case is rather localised.  Mayor Boris Johnson campaigned against it, and is keen to be seen to be consistent with his word.  Previous Mayor Ken Livingstone introduced it more for political than for transport reasons.  Bear in mind this was not to raise revenue, but to manage congestion.   It is worth noting that Boris Johnson's draft Transport Strategy is open about the future of congestion charging, meaning it could go further in due course.

As recently as 2006, many policymakers across Europe and North America were looking closely at systems that charged for driving into the busiest areas or according to the distance driven. Those that tracked cars using satellite, microwave or number plate-recognising cameras..
The only people talking about tracking cars via satellite are technologically inept journalists.  GPS satellites track nothing, as they are broadcast satellites that allow devices to calculate location of the device.  Whether anyone tracks that requires a communication interface, which GPS certainly is not.   Indeed designers of these systems have been making every effort to avoid tracking, although this doesn't make good copy for sensation seeking journalists.

The article quotes Professor David Begg, a key UK advocate of road pricing, who points out that the recent emphasis on using road charging for environmental objectives (which is a European focus, not one seen in other parts of the world), can exacerbate congestion by providing advantages to low emission cars.  He is quite right.  A key issue for anyone contemplating road pricing is to be objective driven.   

A useful dimension far too often ignored is how, in some cases, rural motorists would be better off if there was economically efficient road pricing:

Charlene Rohr of the European arm of the Rand Corporation, the US think-tank, says a system of variable direct charges would cut costs for many drivers – and improve driving conditions for all. “Farmers in rural England would be better off,” Ms Rohr says.

The big push in the US today is to replace fuel tax with distance based charging.  It is proving politically impossible to raise fuel taxes to keep abreast of increasing fuel economy, so several states are considering road pricing to provide a sustainable source of revenue.  Take the example of Oregon:
The government of Oregon, one of many to fund its highway budget almost wholly from fuel tax, says in 1970 it received the equivalent in 2010 terms of 3.28 cents in fuel tax per mile driven in the state. Today it receives only 1.13 cents.  The result is weaker bridges and potholed rural roads. James Whitty, who manages the part of Oregon’s transport department responsible for finding fresh funding mechanisms, says the state’s highway budget will become “unsustainable” without a new means of charging for road use.

I've discussed this with Jim Whitty, and he understands the difficulties of getting confidence of motorists around issues of price and privacy.   The only way other jurisdictions are avoiding this is by ever increasing fuel tax, which cannot be a long term solution if vehicle fleets exit petroleum-based fuels over time.

I am impressed that the FT talked to noted economist Gabriel Roth, who rightly points out that politicians need to make the case more convincingly. Singapore, despite having a rather authoritarian democracy, actually has one of the most transparent and honest systems:

“The Singaporean government seems to be interested in making everybody richer and more efficient,” he says. “It’s just different attitudes with different governments.”

What I find notable about Singapore is that the revenue is not important, the prices are altered in order to ensure traffic flows freely.  Charging points are established and priced to manage traffic flows, with different charging periods in different directions.  It remains the most sophisticated congestion charging scheme, even though it is the oldest. 

The article points out that toll based financing of major roads is growing, as the numerous articles on this blog testify to.  From Australia to India to Indonesia to Russia to Turkey, tolling is becoming increasingly common as a means to enable major new routes to be built.

Heavy vehicle charging is also spreading across Europe:

The road haulage lobbies of countries with high fuel taxes – such as the UK – support direct charging because foreign trucks can avoid the levies by filling up where fuel is cheaper. France and even the UK’s coalition government – which has entirely rejected a general national charging scheme – are considering systems for trucks.

France is already committed to a charging scheme.  The UK is investigating it.  Heavy vehicle charging exists nationally in Switzerland, Austria, Germany, the Czech Republic, Slovakia and New Zealand, and is also being developed for Poland and Sweden.   Oregon has its scheme as well.  

The FT article seems pessimistic, but in the end argues itself away from such pessimism.  Tolling is widespread across the world, and still has more promise as electronic free flow technology avoids the costs of land for toll booths, and congestion caused by manual tolls.  Congestion charging is more readily implemented in cities during economic boom times when congestion is severe (and other alternatives simply don't seem feasible).  Heavy vehicle charging seems easiest to implement when it is about charging transit traffic, but a full transition to road pricing still seems elusive.   Yet all will ultimately converge, the question is not if, but when and where!

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