Thursday, 11 October 2012

European Commission consults on road charging

The European Commission has released a series of consultation documents intended to seek guidance on what its role should be for tolling/road user charging/road pricing policy and regulation.

The consultation is being carried out using a choice of a long or a short online questionnaire.

Consultation is open until 4 November 2012.

The consultation questionnaires ask about attitudes to road charging across a range of dimensions, such as congestion pricing, heavy goods vehicle charging, charging for air pollution, climate change and noise, whether there should be an emphasis on distance based charging, consideration of what taxes might be reduced if road charging is introduced.  There are questions about whether there should be a mandatory single European tolling service available for full interoperability, and what money received from road charging should be spent on (e.g. roads, cutting other taxes, "sustainable transport", a new EU fund for transport or cutting budget deficits generally).  There are specific questions about personal experiences (e.g. how much would you need to be charged at peak times to change mode of travel, have you experienced discriminatory practices with road user charging in different EU Member States).  It also asks about perceptions regarding standards of maintenance in one's home country and across the EU.  Another question is whether there should be a shift away from manual tolls to fully electronic free flow tolling, and if that should be mandatory.

It is a questionnaire obviously and logically targeted at European citizens and residents, and should be responded to by both commercial and private road users.  

However, it is far ahead of what individual countries elsewhere do in this sector, as it presumes those answering are intelligent and can understand basic concepts of charging and funding.  It should be, at least, an intellectual starting point for many policy thinkers.

The background document makes a few points that may be of interest:

The European Commission's approach to road charging is reflected in the 2011 Transport White Paper which said:

Users should pay at least the marginal costs of the wear and tear of the infrastructure and the main external costs (i.e. noise, pollution and congestion), while for other costs, such as construction costs, the choice of options should be kept wider.

This justifies EU taxpayer contributions to capital expenditure on major highway projects through structural funds.   However, it is an explicit statement that road infrastructure and externality costs should be charged for directly.

It is generally accepted that the cost of greenhouse gas (GHG) emissions, which for road transport consist mainly of carbon dioxide (CO2), are best internalised through other tools such as fuel taxes. 

Fuel taxes are seen as a way of internalising CO2 "costs", but not as an optimal way of recovering infrastructure costs or managing congestion.

A Commission  proposal to review the Energy Taxation Directive, currently discussed in the European Council, is however proposing the clear separation of the CO2 component of fuel taxes.

What this means is that fuel taxes would be disaggregated into infrastructure charging and CO2 components (and presumably general revenue raising), which would add to transparency in discussions about reforming road charging and the partial or full replacement of fuel taxes with other charges.

The current regulatory role of the EC on road charging is confined to heavy goods vehicles:

Road charging of heavy goods vehicles (HGVs) on the TEN-T and motorway network is regulated at the EU level, while no legislative framework exists for cars, vans and motorbikes at the moment.  

The consultation is, in part, seeking for views on this.  The reason HGVs are regulated at present is because their movement is integral to the single European market (and avoiding distortions that mean a Member State charges foreigners more than it charges nationals).   The key directives are Directive 1999/62/EC (on charging HGVs), Directive 2004/52/EC (on a European Electronic Tolling Service) and most recently a communication on explaining how the non-discrimination principle applies in the context of vignettes for cars.


One is financing infrastructure

"The Commission has estimated that 1.5 trillion euro over 20 years is the minimum investment needed to keep pace with the increase in transport demand. 500 billion  euro will be needed by 2020 to complete the TEN-T network. Without these investments, Europe will progressively lose the asset of efficient transport infrastructure capable of supporting long-term, sustainable economic growth."

In times of fiscal consolidation, there is even less justification to call upon the tax payers to finance the maintenance of the transport infrastructure and therefore the network managers have no choice other than to increasingly rely on the users to pay for the it (this is called the 'user pays principle').

Other are better use of price as an instrument to improve transport efficiency, lack of harmonisation between charging systems technically, contractually and in price terms.

Another problem is the lack of transparency and the risk of discrimination in the way in which tolls and charges are fixed, updated and levied...In the field of distance-based charges, road users are generally not consulted or  informed about the rationale behind yearly updates of toll levels. This creates the risk of toll chargers abusing their monopolistic position and making unjustified profits on the tolls.  

The survey itself indicates that traffic congestion costs the European Union 1% of GDP per annum, and EU cities 2% per annum.

In conclusion it is hoped this questionnaire will inform policy, but I fear it will get insufficient publicity to really have enough of a sample from Member States to be meaningful.  I hope I am wrong and I hope the European Commission publishes the results in due course.

So, if you are a European citizen or resident - go on and answer the questionnaire.  If you are not from the EU, then you can still respond and declare your interest as being "international", and it will be given due weighting I am sure.

Disclosure of interest: I provided policy, regulatory and economic advice to the European Commission on tolling/road user charging matters from 2009-2011.

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