Wednesday, 30 March 2011

European Union pushes strong support for road pricing

While much publicity has been seen in the European Commission draft transport white paper calling for a ban on cars with internal combustion engines from cities, it is also strongly in favour of road pricing, albeit for purposes likely to be controversial to many road users.   I doubt there will be a 50% shift from road to rail and water for intercity passenger (and especially freight) trips, but this blog is about road pricing.  So what does it mean for the 27 EU Member States?

For a start it is a White Paper, which means it forms a strategic policy framework which provides guidance but is not to be legally enforced across all Member States in all forms.  Much implementation will be at the national and local level, so the EU role will be more limited.

I have found a few references to road pricing:

2.4 "Road pricing and the removal of distortions in taxation can also assist in encouraging the use of public transport and the gradual introduction of alternative propulsion."  So it is seen as a tool to penalise existing road users.

3.3.  Concern over the need for trucks to have multiple toll and vignette transactions to cross multiple borders, with interest in pursuing a single interoperable approach.  The key problem of course is that despite this goal, most truck operators do not have vehicles crossing so many borders, but rather just a few.  The market for this is not large.

It wants to encourage direct charges to raise revenue, but also "internalisation of externalities".  That means charging for pollution.  It also advocates users paying a greater proportion of costs, which is more of an issue for public transport than roads, although I doubt the EC would acknowledge that.  However, I have no issue with encouraging user pays. 

Yet, it becomes more specific here:

For passenger cars, road charges are increasingly considered as an alternative way to generate revenue and influence traffic and travel behaviour. The Commission will develop guidelines for the application of internalisation charges to all vehicles and for all main externalities. The long-term goal is to apply user charges to all vehicles and on the whole network to reflect at least the maintenance cost of infrastructure, congestion, air and noise pollution.

Noise? Somehow relieving property owners from their choices around location would seem to be far from economically efficient.  However, the goal is ambitious - full network pricing that recovers "at least" costs of infrastructure, congestion and pollution.  Why it could be more (other than a profit factor) is unclear.

The EC wants a leading role to revise vehicle taxation saying that by 2016:

• Revise motor fuel taxation with clear identification of the energy and CO2 component.
• Phase in a mandatory infrastructure charge for heavy-duty vehicles. The scheme would introduce a common tariff structure and cost components such as the recovery of wear and tear, noise and local pollution costs to replace the existing user charges.
• Evaluate existing car road charging schemes and their compatibility with the EU Treaties. Develop guidelines for the application of internalisation charges to road vehicles, covering the social costs of congestion, CO2 – if not included in fuel tax – local pollution, noise and accidents. Provide incentives to Member States who launch pilot projects for the implementation of schemes along such guidelines.
• Proceed with the internalisation of external costs for all modes of transport applying common principles while taking into account the specificity of each mode.
• Create a framework for earmarking revenues from transport for the development of an integrated and efficient transport system.
• Issue guidelines providing clarification concerning public funding to the different modes of transport and to transport infrastructure, where necessary.
• Reassess transport taxation where necessary, namely by linking vehicle taxation to environmental performance, reflecting on possible way forward to review the current VAT system concerning passenger transport, and revising company car taxation to eliminate distortions and favour the deployment of clean vehicles.

I understand fuel tax as a CO2 charge, but not beyond that if you have full road pricing.  The agenda for trucks is clear, all should pay a charge to reflect infrastructure and external costs by 2016.  For cars, there is interest in piloting congestion charges.  However, note that the system is meant to be used to subsidise other modes.  Quite why they should expect financial support if road transport is efficiently charged escapes me, as this is far from efficient.

It wants to subsidise toll systems and interoperable tolling saying "Provide EU support for developing and deploying technologies that improve  infrastructure use efficiency and decarbonisation (new road network pricing and tolling systems, ITS and capacity improvement programs)"

So in conclusion, it is ambitious. The EU wants full network road pricing, which reflects infrastructure costs and environmental costs, and it wants it now.  It wants to standardise systems across Europe and incentivise trials for congestion charging.  However, as much as this is interesting and positive, it also harbours a clear  anti-road transport agenda, wanting to use such charges in part to subsidise other modes, even though such pricing ought to eliminate any need for this.

The bigger question is how this will influence EU Member States.  The EU has supported pricing before, but it would be hard to say that the EU has effectively made much difference in promoting it.  Member States have pursued truck tolls, highway tolls and congestion charging based on domestic political considerations.  The useful EU role has been to ensure non-discrimination and transparency are applied to tolls so that they are not applied in ways to penalise foreign road users.   It would be unfortunate if it saw its role to be to unfairly and inefficiently penalise road transport once road pricing systems are in place.

The new European Union Transport White Paper (which has a far wider remit than roads) is available here as a PDF.

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