Tuesday, 25 October 2011

Finland: Minister wants national road pricing, Ministry thinks it is too difficult and costly

There have been discussions about congestion charging in Helsinki for some time, but the political climate for introducing road pricing in Finland seems to have changed, quite dramatically.

The six party coalition formed after the June 2011 elections is quite a mixed group. It is comprised of the National Coalition Party (centre-right liberal), Social Democrat Party (centre-left), Left Alliance (far left), Greens (left), Swedish People’s Party (centrist liberal) and Christian Democrats (conservative).
The new transport Minister is Merja Kyllönen from the Left Alliance, and she is keen on road pricing, but not keen on a Helsinki only congestion charge as I reported previously.

State broadcaster YLE reported that she supports a national road pricing scheme, on all roads, for all vehicles. The idea is that it would vary by time and location, so would charge for congestion, but also charge according to the level of public transport availability. The idea being that, say in Helsinki, it would cost much more to drive if the route had a parallel metro line, but not if someone was driving in a remote area.

She didn’t “have a position” on whether such pricing would replace other charges, but appears open to discussion on it. An obvious option is to replace vehicle ownership taxes and reduce fuel taxes as well.

The YLE report indicated that an advantage for Finland developing such a system would be that it could “sell” it to the world, indicating interest in developing the technology and systems locally to the extent possible (and permitted under EU rules).   However, there are quite a few system developers and manufacturers which would be keen to sell technology for implementation in Finland, to avoid a new competitor arising from, say, a rather significant Finnish telecommunications company?

However, the latest report from the Helsinki Times indicates that the Finnish Transport Ministry does not think it is technically feasible. The claim is that “there were fundamental technological hurdles, adding the system would be expensive and easy to cripple with a piece of aluminium foil.”

It would be a shame for that view to prevail, because it is technically possible to do. Systems in Germany, Slovakia and New Zealand all demonstrate that distance based charging, using GPS, can be implemented not only on motorways, but on all roads, and for heavy and light vehicles (see the links on the column to the right under network road pricing). It is likely that France, Belgium and Denmark will follow (and the Netherlands has several times tried to, but only stopped because of politics).

Yes, there is an issue of cost. The initial cost of installing On Board Units to do GPS based tolling is high, and there are always considerable risks with rolling out any system for large scale public use. This initial expense needs to be considered, but the long run economic benefits of better pricing should more than offset this.

Finally, the claim that you can cripple such systems with aluminium foil has been refuted, because protection against this can be built into the system. After all, Germany has been collected distance based charges from trucks over 12 tonnes, from many countries, since 2005. There are multiple ways to make such tampering ineffective, or easily detectable.

The potential benefits to Finland for national road pricing will come from reduced congestion, reduced emissions, greater certainty of revenue collection (as it wont be related to fuel use) and the ability to target pricing of roads related to road usage and vehicle type. A full costs and charges study and national road pricing feasibility study (similar to those carried out in the UK), could consider how efficient road pricing might impact on demand and would generate information on the costs and benefits, and be a worthwhile first step.  It would provide data behind the intellectual ammunition as to how better pricing can benefit the economy, the environment and affect social change.

My view is that it would make sense for Finland to introduce a national system on heavy vehicles first, to reduce the risks involved, prove the system and help develop a strategy to include light commercial vehicles and then private cars. The benefits from heavy vehicle charging are not high, and come from more efficient operations and routing, and maybe addressing pricing disparities between modes.  However, it is a sound platform upon which to roll out a system to cars, and the Netherlands recognised this with its proposed approach.

It’s about time the Finnish Transport Ministry took a good look at the costs of implementing GPS based road pricing, and the technical risks and how they can be addressed. Things have moved on a lot in recent years, the real issue should be about how best to extract the greatest benefits for Finland as a whole, whilst keeping risks and costs at manageable levels.  What the Minister is seeking does have a high upfront cost, but it is technically feasible, and the benefits will be akin to that of Helsinki congestion charging, but on a wider scale.    Indeed, if Finland can embark on a programme of national road pricing for all vehicles, it will certainly be a world leader. 

(PS: My news on Finland is derived from translated Finnish sources and English sources.  Obviously if someone in Finland knows more about the current position, I'd be keen to hear from you).

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