Auckland's Mayor and Council vote overwhelmingly for congestion charging, but there are some issues

The big road pricing news in New Zealand in the past week was the Mayor of Auckland, Wayne Brown, calling for congestion charging and appearing on media declaring how critical it was for the city. This was not in terms of raising revenue, but in addressing congestion.  On Radio NZ he said Auckland could not afford another motorway, and that the charge would be avoidable by driving outside of peak times.

“I am of the view that this should be on our motorways in the central areas of Auckland, which are the most congested, and this is also where public transport works best, which gives some people an option rather than paying the charge”

He ridiculed concerns about equity around trade businesses, saying that to pay $5 to save 20 minutes was a small fraction of the price the tradespeople charge their customers in an hour. He also said that schoolchildren “don’t’ have a right to be taken to school in a BMW” and more should walk, bike or use public transport. 

The Mayor was elected in 2022 and has a three year term, but his support for the concept was only solidified when Auckland Council voted 18-2 in favour of setting up a team to oversee implementation of congestion charging.

Despite that report, Auckland is not going to get congestion pricing in two years. Legislation will take around a year to introduce and pass at best, and it will take around 18 months to procure and install a system at best. However, you have to admire the ambition.

The astonishing level of local political support for the concept is unheard of in any other city where the private car is by far the dominant transport mode.  In 2018 (according to the Census), around two-thirds of Aucklanders commuted by car (whether as driver or passenger), 11% by bus, 9% walked and 8% worked from home, 3% by train and just over 1% by bicycle. It seems likely that the proportion working from home, cycling and using public transport has increased since then. 

Let's be clear to those unfamiliar with Auckland. The Mayor is ostensibly "centre-right" and got elected opposing the "war on cars". The Council as well is fairly balanced between left and right wing members.

Unlike New York and almost all other US cities that have been investigating congestion pricing, Auckland is regarding the net revenues as secondary (although the Mayor is interested in revenue, as the incoming government has pledged to abolish the regional fuel tax of NZ$0.10 per litre that raises revenue for transport projects in the city). The primary focus is reducing congestion and encouraging behavioural change. However, it would clearly generate net revenue and would also have positive environmental benefits.

Why does this matter?

All of the cities that have introduced congestion pricing around the world so far have been quite different from Auckland, and indeed all of the predominantly car-oriented low density cities that are seen in New World cities in New Zealand, Australia and North America. Singapore, Oslo, London, Stockholm and Milan all have significant mode shares for public transport. However, Dubai and Abu Dhabi (and soon Doha) are car dependent cities, even moreso than Auckland, whereas Gothenburg in Sweden is much closer to the mode shares seen in New World cities. 

Although New York will be the first US city to introduce some form of congestion charging, it is being implemented in lower Manhattan, which is much more like central London than most US cities, and it is being introduced 24/7 (with peak charges) primarily to raise revenue. New York is not a model for other North American cities.

Auckland on the other hand, has around 87% of its employment outside the central city, it has around a 50% mode share for public transport and active modes for trips to the central city at peak times, but a much lower mode share for trips to other parts of Auckland at peak times. In short, congestion in Auckland is primarily about trips across the city, not to the downtown.  Pricing in Auckland will work only in part by encouraging modal shift, but will in a large part be about encouraging a small proportion of trips to shift time of day or frequency of driving. 

Furthermore, unlike many other developed cities, Auckland has had over 20 years of billions of dollars in continuous major capital spending on its transport networks.  During that time, the road network has been significantly upgraded, with additional lanes on motorways and a ring route around the west bypassing the congested central motorway junction. The commuter rail network was extended to the downtown, electrified with new trains, adding new lines, and is now being expanded with an inner city loop. Bus services have been expanded, with busways and new buses, routes and expanded frequencies.  In short, Auckland has seen extensive capital spending on its transport infrastructure and it has been unable to keep up with demand, and congestion has not been resolved.  

Supply of transport infrastructure does not sustainably reduce traffic congestion. 

If Auckland successfully implements congestion pricing, it will be a world leader in implementing road pricing in a city with automobile dominance.

What has been proposed?

The Mayor has specifically proposed a charge on two segments of motorway of NZ$3.50 - $5 per trip.  It would operate in the AM and PM peaks only on the North Western Motorway (SH16) between Lincoln Road and Te Atatu Road, and on the Southern Motorway (SH1) between Penrose and Greenlane. These are two of the most congested parts of Auckland’s motorway network.  The map below depicts the short section of North Western Motorway, the segment of Southern Motorway and the earlier proposed downtown cordon (which is bypassed by the motorway network which goes from south to the Auckland Harbour Bridge and from the west to the Ports of Auckland).

Auckland congestion pricing concepts.

Undoubtedly the motorway proposals would have a positive impact. While the North Western motorway at this location has no reasonable alternative route, the Southern motorway does have a wide at-grade arterial road, albeit with multiple sets of traffic signals and a much lower speed limit. Some measures would need to be taken to minimise diversion onto the parallel routes. 

It's worth noting that a major study into congestion pricing in Auckland, called The Congestion Question, was carried out from 2016-2020, and recommended that a downtown cordon be introduced, followed by corridor charges on major routes in the isthmus and beyond.  The Mayor is proposing the second stage, but that is good as the downtown cordon concept was likely to have a less dramatic impact than the proposed corridor charges.

The proposed technology would be automatic number plate recognition (ANPR) cameras.

What needs to happen?

Congestion pricing is currently illegal in New Zealand. The outgoing Labour Government had draft legislation prepared to implement it, but this will be revised with the incoming National led Government. National included congestion pricing in its transport policy, so there is little chance of the policy being rejected by the new government. Until legislation is introduced and passed, congestion pricing cannot be implemented, but in the meantime, it is possible for Auckland Council and Auckland Transport (a separate entity under the auspices of Auckland Council) to plan and prepare for road pricing. 

The motorways in Auckland are not under the control of Auckland Transport, as they are State Highways. They are Crown owned (and fully funded by) and managed by the New Zealand Transport Agency/Waka Kotahi. It seems unlikely that central government would devolve power to impose pricing on motorways it owns and manages to local government. However, it seems much more likely that a joint entity, between central and local government could be set up to manage pricing across roads in Auckland. 

What are some of the big issues?

Oversight

A key issue is how much control central government, in particular the forthcoming Minister of Transport and/or Cabinet, wish to have in approving and later amending congestion pricing schemes. At present the Minister approves tolling schemes, which are only for new roads. At present there are only three toll roads in New Zealand (one in outer Auckland). It seems unlikely that government will want to give road controlling authorities free rein to implement congestion pricing, but it would also be unwise to require changes in pricing to go through a political process. 

A middle approach would be to require Ministerial approval for a road pricing proposal (by a road controlling authority on specific roads within certain time periods) concept but grant powers to road controlling authorities to adjust pricing and business rules within set parameters, with oversight by an economic regulator (such as the Commerce Commission or a more specialised highway economic regulator).  The oversight would be to ensure prices were not set to be higher than necessary to relieve congestion, or to be unduly burdensome on different types of road users, and to monitor use of net revenues (which is another issues). Ultimately the need for political approval could be reduced, if the economic regulator has sufficient powers to protect consumers.

Governance

The other governance issue is what entity should be responsible for pricing? It could be left to the relevant road controlling authority, but for Auckland it would make sense to have a joint-governance entity for both Auckland Transport and NZTA roads, with sufficient delegated authority to manage pricing within set parameters. A joint entity would mean that there could be a single road pricing account, and that enforcement, communications and information could be unified. It would also provide a structure for managing net revenues, contracting for equipment and services.

Use of Net Revenues

The Mayor would like pricing to replace the regional fuel tax in Auckland, which raises around $150m per annum. However, this is likely to be controversial. There are clearly a range of options available such as:

• Capital funding for public transport and active transport projects

• Capital funding for road improvements

• Offsetting ratepayer funding for road maintenance and improvements (reduces rates)

• Offsetting ratepayer funding for public transport subsidies (reducing rates)

• Dividend to ratepayers, households or residents

Internationally, the most popular options have been to use the net revenues to support some mix of road and public transport projects. If that option is selected, the projects ought to be high-quality (i.e. net economic benefits) and ideally be related to the locations subject to pricing (i.e. new transport capacity). However, it is likely to be tempting to simply replace the regional fuel tax as a revenue source (as removing that tax will benefit all Auckland motorists). It may also be tempting to use it to offset ratepayer funding on transport capital projects in any case, but if done on the scale proposed by the Mayor, it seems unlikely to gain much support if revenue from specific locations is used to benefit transport users not using those corridors. If motorways are going to be priced, it seems unlikely that central government will want to pass on control of use those revenues to local government. However, if a joint pricing entity is established, it may be reasonable to get agreement across both levels of government as to the use of net revenues for several years in advance.  

Prices, products, discounts and exemptions

Rates should be set at levels that will achieve enough behavioural change to relieve traffic, they should only be applied at peak times, and have a shoulder rate either side (for say half an hour) to avoid rushes to avoid the peak.  Rates should only apply in the peak direction (which may be both ways).  Exemptions and discounts should be minimised, and focused on local buses, emergency services, drivers with mobility disabilities and motorcycles, and there is a case for higher charges for heavy trucks and coaches (due to the amount of road space they occupy). A daily caps on charges might be considered, but if pricing is implemented on the scale proposed by the Mayor it seems likely to be unnecessary.

Motorists could be billed directly through direct debit, or have prepaid accounts able to be topped up through internet banking, phone banking or manually using cash at selected retail outlets.  Visitors could be offered “daypasses” for unlimited driving of congestion priced routes, but if only operating at peak times, it seems easier to simply send an invoice to a registered vehicle owner through post/email. 

Is it a good idea?

The biggest strategic decision is whether the Mayor’s idea of pricing a couple of sections of motorway should be the first step or if the downtown cordon concept should be.  There are advantages and disadvantages of each option.

Undoubtedly the pricing of two sections of motorway would have a more direct and obvious impact to motorists and could be seen as demonstrating more clearly how pricing could work, and be implemented incrementally around Auckland. It is likely to be higher risk than implementing a downtown cordon because of that impact, but will be more effective.  Given that, it makes sense to seriously consider the Mayor’s proposal.

On the other hand, the downtown cordon would be an effective pilot. It is clear that almost all drivers into downtown Auckland have modal alternatives, and with the opening of CRL (City Rail Link) which provides an underground rail loop around downtown Auckland, that case is strengthened.  Such a cordon would improve congestion on a range of routes approaching the city centre, including three motorways, but the effects of that reduction would drop significantly a good kilometre or two away, as so much traffic in Auckland is not focused on trips to downtown. 

If it were up to me, I’d say it would be preferable to implement the Mayor’s proposal of pricing on two stretches of motorway as a first step, rather than the downtown cordon.  The downtown cordon should be implemented, but in and of itself it doesn’t demonstrate to Aucklanders the effectiveness of pricing a corridor, which is as much about shifting time of demand as it is about shifting mode. The downtown cordon should be timed to be implemented shortly after CRL opens (CRL needs to work seamlessly first). 

The North Western Motorway corridor ideally wouldn’t have pricing until the North Western Busway is built, but the existing bus lanes could provide sufficiently additional services to make pricing worth implementing there. The Southern Motorway corridor parallels a railway line, and some bus services, so that shouldn’t be a problem in terms of alternatives.

If rat running is an issue (which it may be for the Southern Motorway) then technology can be used to deter it, by identifying vehicles leaving the motorway early to avoid a charging point and returning to it after. Pricing could be set at levels to make diverting not worth the time penalty.

What do stakeholders think?

The Employers and Manufacturer’s Association (EMA) head of advocacy and strategy Allan McDonald was supportive according to RNZ saying “You come back to getting the most out of the system you can and finding different ways to help those who may be disadvantaged by the cost but there are significant benefits too”. He noted Auckland needed better public transport, but the road network needed to work better too. 

Automobile Association Auckland issues spokesperson Martin Glynn said there were benefits, but he was concerned about the impacts on low-income drivers with few alternatives. 

Public Transport Users Association chairperson Niall Robertson was concerned that there needed to be better public transport alternatives. 

What next?

First and foremost, a new Government needs to be formed, and the incoming Minister needs to make it clear the parameters within which congestion pricing will be authorised. 

Secondly, the policy and the messaging around congestion pricing needs to be clear, to address fears and concerns, and to avoid the public guessing, wrongly, about what may be implemented, why and how.  It needs to be clear it is about reducing congestion and pricing should be based on meeting performance standards. It also needs to be clear that pricing does not need public transport alternatives for all drivers, to be implemented, but that the choices drivers have range from changing time of travel, mode of travel, route of travel or to drive less frequently. 

Thirdly, legislation needs to be drafted and introduced to implement the intended policy.

Fourthly, Auckland Council, Auckland Transport and NZTA need to work together on a detailed design and implementation of a phased plan for congestion pricing in Auckland. Starting with either two corridors or a downtown cordon. 

Fifthly, NZTA and Wellington and Tauranga local authorities also need to work together to undertake more detailed studies for both cities, consistent with legislation and central government policy.

What NOT to do?

1. Don't see London as an example to copy. London is an area charge, it has a flat all day rate and has not enabled traffic to flow relatively efficiently for over 10 years because it is too blunt. London may be seen as culturally closest to Auckland, but it is vastly different. Better examples are in Singapore and Stockholm.
2. Don't make this project about raising revenue. When the focus becomes revenue raising, the design will change and it becomes a lot more difficult to get the public on-board, because you are designing a tax, rather than a traffic management and pricing scheme.
3. Don't make this about reallocating road space. While there will be localised cases where there is merit in doing this (specifically for cycling safety or bus priority at intersections), a successful congestion pricing system should enable all traffic to flow efficiently, including buses, and will improve conditions for all modes on the roads.  Some advocates for congestion pricing see it as a tool to penalise driving and to make it more difficult for motorists to drive. If this is the policy adopted, it will be rejected by the public (as it has been in many many cities), as pricing need not be a tool of penalty, but a tool to make existing networks work better. 
4. Don't play with technology yet. There would be nothing wrong in eventually linking the current eRUC telematics systems to congestion pricing so their users (almost all commercial vehicles) pay charges automatically, alongside RUC.  However, ANPR is just fine for now.
5. Don't make any announcements on details until you have decided on most of them, and have responses as to why you made certain decisions. Don't let the media and public discourse determine policy. Design a good system with defensible policies, and then present it to the media and public, so you can make clear what might be negotiable and what is not.  A litany of failures elsewhere are due to letting policy debates get out of control, raising fears and uncertainty, and consigning the concept to the "too hard" basket.

(Disclaimer: I worked on The Congestion Question project from 2016 to 2019)  

Iceland likely to be first European country to introduce RUC for light vehicles

Few remember Iceland when discussing experience in road user charging (RUC) in Europe, perhaps because it is an island (and so has virtually no foreign vehicles visiting), and it is also not a member of the European Union (but then neither are Switzerland or Norway). 

Iceland has had for many years a RUC for heavy vehicles, in the form of a fairly simple weight-distance charge on vehicles with a maximum allowable mass of ten tons or greater.  In 2008, it raised IKK1.083b (US$7.8m).  

RUC for EVs and plug-in hybrid vehicles

However, Iceland is about to leap ahead of all other European countries in being the first to implement a nationwide distance-based RUC for electric, plug-in hybrid and hydrogen vehicles from 1 January 2024.  Consultation on a draft Bill (Icelandic only) to implement this charge has recently closed. Iceland Monitor reports that the fee will be ISK6 per km for electric and hydrogen powered vehicles (US$0.043 per km or US$0.069 per mile), but hybrids will be charged only ISK2 per km (US$0.014 per km or US$0.022 per mile), to reflect that they continue to pay fuel taxes. 

Iceland has had a significant growth in electric and hybrid vehicles, with 85% of new light vehicles sold in Iceland in 2022 being electric or plug-in hybrids.  This reflects a VAT exemption for such vehicles, and other very low taxes. 73% of Iceland's electricity comes from hydro-power and almost 27% from geothermal energy, so electricity prices in Iceland are immune from international commodity prices.  Nearly 20% of all cars in Iceland are either electric or hybrid of some form, so the impacts on fuel tax revenues have been considerable.

So Iceland will have surpassed the rest of Europe as no European country has so far mandated or even agreed to introduce some form of distance-based RUC for any light vehicles at all. 

RUC for all vehicles

This isn't the end, as the Icelandic budget indicated that the introduction of the new fee will be monitored in 2024 with an eye to applying it to ALL vehicles under ten tons, and to review the future of taxation of petrol and diesel. This had led to speculation that Iceland could put all vehicles on RUC and reduce or abolish fuel taxes used to fund the transport system. If it does so, then it will be a world-leader in transitioning from fuel taxes towards RUC, and so shifting from taxing energy to taxing road use.

Reactions in Singapore to ERP 2.0

Following the announcement of the roll-out of ERP 2.0 in Singapore (using GNSS-based On Board Units for congestion pricing), there has been some comment in the media in Singapore about the new system and policy around it. Some of this is likely to be relevant to other jurisdictions considering mandating such technology into motor vehicles.

What do motorists and car dealers think?

The Straits Times published an article on 25 October by Lee Nian Tjoe on what motorists and car dealers think.

Dealerships generally said that they were ready for the rollout, as some had been establishing how to conceal wiring and have the equipment installed in their vehicles, but some still were awaiting information...

Ms Tracy Teo, marketing director of Komoco Motors, which represents Hyundai, Jeep, Ferrari, Maserati and Alfa Romeo in Singapore, said the company is awaiting information and instruction from LTA on the next steps.

One of the key issues is that getting such equipment installed in a wide variety of makes and models may present challenges for some varieties of vehicles. 

Comments from members of the public approached by the journalist were largely questioning with some concerns, such as the location of the OBU on the side of the passenger footwell.  One objected to the system having capability to have stored value cards inserted given how technology had moved beyond that. 

The article describes how a fleet operator was used to test installation of 500 devices in a pilot.

Should it have been rolled out in the first place?

A second article from the website Techgoondu is critical of the new system.

Author Alfred Siew describes it as:

the unwanted rollout of a costly project that has taken nearly 20 years to complete, if you count its early efforts. It is clearly outdated and inconvenient for users. Many questions have already been raised about this “next-gen” ERP 2.0 unit when it was unveiled two years ago. Most damning was why it was even necessary.

Part of this is unfair, as it is not a 20 year long project, but it is certainly was being thought about 10 years ago. Singapore needed a new system because "ERP 1.0" was creaky and obsolete, and needed replacement.  It would have been cheaper to go all ANPR (Automatic Number Plate Recognition) based, but certain features would not have been available, and it could have simply been an update of the current technology.  However, Siew notes correctly that the "next-generation" features around traffic information are largely available through apps such as Waze.  Smartphones are able to be used as the in-vehicle display is optional, so the question becomes what it would have taken to make smartphones work?  The key issues around reliability and linking it to the vehicle remain, but this is being trialled in Brussels now.

Siew describes the system as old technology, with the stored-value cards which are increasingly obsolete and an in-vehicle display reminiscent of pre-smartphone navigation systems.  Of course many cars have automaker installed telematics with some key elements of the ERP 2.0 system included, although not available for congestion pricing applications. Making Original Equipment Manufacturer (OEM) telematics systems available and suitable for road pricing is perhaps the "rosetta stone" for ubiquitous road pricing in the future.  Unfortunately efforts to do this so far have been very limited across the globe.

Siew finally criticises it for being a system with the capability to introduce distance based charging, but that capability is not to be used as of yet.  That doesn't mean that it won't  be and it is entirely understandable that a policy decision to do that would not be announced until the entire system is installed and proven, but unless it is used, it seems like an expensive solution to what is just an effort to replace an old system with one with less intrusive roadside infrastructure.

Of course LTA had signed the contract for the ERP 2.0 system some years ago and became committed to the project, so it had to be rolled out.  Hopefully it will all prove to be worthwhile and operate successfully for many years to come.

Distance-based pricing is unlikely anytime soon

Newspaper Today online published an article by Loraine Lee on 25 October saying that it was unlikely LTA would implement distance based pricing soon.

Key issues identified were:

• How to apply it equitably, including the future of fuel taxes and vehicle registration/ownership taxes, so that those that travel the most are not paying disproportionately compared to what they do now.  
• Questions over the location accuracy of the technology in parts of Singapore with tall building, and with tunnels (the latter is not a real issue, as systems elsewhere can clearly note when vehicles travelling on a road disappear and reappear at another location, that they must have been in the tunnel on that route). 
• Need to consider the wider impacts of a shift towards distance-based charging on some road users.

The accuracy issues can certainly be addressed, as they have been in other GNSS-based road user charging systems in Europe, the United States and New Zealand, but the policy issues about Singapore's mix of taxes require some further work to disaggregate.  Clearly fuel taxation will be eroding due to the emergence of electric and hybrid vehicles, and a shift from ownership based taxes to usage based taxes is likely to increase car ownership, but reduce distance travelled by car and congestion, so some modelling will be needed to forecast the impacts on Singapore's traffic (and vehicle fleet size).  

The key point is the new system will provide options, and it would be a poor use of the technology to not have some form of distance based charging or at the very least use it to implement more 'virtual gantries' for pricing.  

Time will tell whether other cities will copy Singapore technologically (they should copy parts of it in terms of pricing policy), my suspicion is that the inclusion of a slot for stored-payment cards is unlikely to be replicated, nor is a in-vehicle display, but the core of the technology still has merits.  The options for using GNSS-technology for congestion pricing are:

• Purpose built OBUs for professional installation in vehicles
• Scaled down "self-installed" OBUs
• OEM telematics 
• Smartphones

Singapore has chosen the first, we will see if the next GNSS-based congestion pricing system selects an alternative.

Singapore launches ERP 2.0... finally

The Straits Times reports that Singapore has, finally, announced to roll out of its ERP 2.0 On Board Units (OBUs) over then next two years. Starting in November 2023, fleet operators will get OBUs installed in their vehicles, and from no later than April 2024, new vehicles will have the new OBUs installed.  Remaining vehicles in Singapore will be required to have the OBU installed based on date of registration over the subsequent two years.  

Installation is estimated to take three hours for a car.  All motor vehicles in Singapore will be required to have the new OBUs, including motorcycles (which have a smaller single unit OBU).  Installation will be free of charge if done within a two month window specified by the Land Transport Authority (LTA) (notified to the registered vehicle owner in advance). 

Payment options will remain the same including direct debit of credit or debit cards, or use of prepaid stored value cards (which can be inserted into the base unit of the OBU).

The car unit is in three components:

• Processing Unit
• Antenna Unit
• Touchscreen Display

The image below is the official depiction of the ERP 2.0 installation.

Singapore ERP 2.0 OBU for cars

The touchscreen display is optional, as motorists can choose to use their smartphone which will deliver road pricing and traffic data through a choice of three apps. 

The report notes why the LTA did not choose smartphones as the processing devices:

• Security for real-time charging transactions from prepaid stored value cards
• Reliability, given the range of smartphone models and operating systems available (including older models)
• Concern over ensuring whether an app is functioning, the smartphone is sufficiently charged and is connected to the mobile network.

Singapore's highly intrusive ERP gantries will not be removed until the installation is completed, after which they will be progressively removed and replaced with signage, and in some cases Automatic Number Plate Recognition (ANPR) cameras for spot enforcement (and to ensure ERP 2.0 devices are not malfunctioning). 

Importantly, Singapore has no plans to change its policy on road pricing, and plans to keep charging at specific points on the network as it does now.

More details are available here on the LTA website.

The installation of ERP 2.0 is three years later than originally planned by the Singaporean Government. It had been delayed by a combination of the effects of the Covid 19 pandemic, and subsequent chip supply shortages hindering the production of the new system.  In 2016 I wrote that Singapore was planning to have the new system up and running by 2020.  It is unclear if the budget for the system S$556m has been exceeded as a result.

What it does mean is that Singapore can be declared as having the world's first GNSS-based congestion pricing system.  It has the flexibility to charge by distance, but also the flexibility to introduce "virtual gantries" anywhere in the network, and with the installation of OBU 2.0 as compulsory, it means there needs to be only small-scale enforcement of whether the devices are installed and functioning, unlike cities with many vehicles visiting from other jurisdictions. Foreign vehicles in Singapore without an OBU are charged on a per day basis for the time spent in Singapore, at a rate of S$5 per day, regardless of the extent of use of ERP charged roads. 

Singapore's OBU 2.0 may provide a benchmark for other cities, although the need for three hours of installation time, and at least two components, is likely to be seen as expensive and intrusive for many other cities. Nevertheless, Singapore still remains the gold standard of congestion pricing systems internationally, and it remains notable that in a city-state that has relatively low levels of evasion and little difficulty in enforcing traffic offences, that it continues to be sceptical of the reliability and security of using smartphones for road pricing.  This might reflect the commitment it had already sunk into the new OBUs, but it has accepted the use of smartphones as a customer interface and information system.

This video has been published by Channel News Asia (of Singapore) about the new OBU:

Victoria (Australia’s) electric vehicle road user charge ruled unconstitutional

In a landmark court decision, the High Court of Australia ruled (in a narrow 4-3 ruling) in the case of Vanderstock & Anor v State of Victoria, that the Zero and Low Emission Vehicle Distance-based Charge Act 2021 is invalid under Section 90 of the Constitution as it imposes a duty of excise.  The charge was known as the ZEV in Victoria.

This effectively means Victoria’s distance-based road user charge (RUC) for battery-electric and plug-in hybrid electric vehicles is illegal.  The basis for the decision is interesting, as it appears to be that:

The charge was deemed by the court to be “a tax on goods because there is a close relation between the tax and the use of ZLEVs, and the tax affects ZLEVs as articles of commerce, including because of its tendency to affect demand for ZLEVs”. 

If I put my legal hat on (I am a lawyer), this is quite an interpretation, as it seems to regard the charge as being an excise because it affects demand for zero and low emission vehicles. This blog is not the place to debate the legal arguments, indeed the dissenting judgments amply raise the key issues.

The obvious policy question is if a charge of A$0.028 per km on the use of zero emission vehicles is an excise because of its "tendency to affect demand for ZLEVs”, and if the tax (it was critical that it be deemed a tax, and not a fee for services) is a tax on goods, is not the annual registration fee (which is A$876.90 (US$553) for a car in a metro area of Victoria) similar? It is effectively a tax on being able to use the car.

However, the court has ruled, and it does beg a wide range of questions both at the strategic policy level around charging road vehicles to use roads in Australia, and the effect the decision has on the options to do this.  At a basic level there are two points:

1. The Victorian ZLEV tax as it was designed is unconstitutional: This was a mandatory charge, that had no option (as applies in some states in the US) to pay a flat annual fee instead, which only applies to a small proportion of light vehicles.  Would a tax that had another option be legal? Would a tax that applied to all light vehicles be legal, including one that might largely replace registration fees (so may have a neutral effect on demand for light vehicles as a “good”)? Would it have been legal had the Department levied it as a fee based on costs of providing a service, rather than as a tax? 

2. The Commonwealth can levy a tax charge such as the ZLEV, but only across all of Australia: If it were policy, the Commonwealth could pass legislation requiring all electric vehicles in Australia to pay a per km RUC.  Similarly, could it apply it to all light duty vehicles? Arguably fuel excise duty does that now, but fuel excise duty strictly speaking affects demand for the fuels that are taxed, if you consider the definition applied by the High Court.

What happens next is obviously going to be a matter for the Victorian Government to consider, and indeed given both New South Wales and Western Australia have legislated for their own RUC systems to apply to electric vehicles from 2027, they will have an interest (along with all other States and Territories).  Is it possible for them to design a road user fee, based on provision of a service (roads as a service) and the costs of providing it?  If so, how could that be legally drafted without simply empowering a road manager to implement such a fee? Could it be applied across all road managers in Victoria? There are 79 local road managers and at least 1 state road manager in Victoria.

Victorian Premier Tim Pallas argued that it was about “fairness” and noted that electric vehicles were heavier and contributed more to “road degradation”. That latter point is highly questionable, but also not really relevant.  The difference in weight between types of light vehicles makes very little impact on road wear, as most road wear and tear arises from the effects of weather and temperature, and the passage of heavy vehicles, not vehicles weighing < 4.5 tonnes.

The Commonwealth Government might be expected to have a view on the future of charging electric and other light vehicles for road use, as it was supportive of the plaintiffs. It would be reasonable to expect a policy position to be expressed in the coming months either to advance investigations in how RUC might be implemented for electric vehicles across Australia or to defer considering it until they are a larger proportion of the fleet. Ultimately it cannot be avoided, and it is in Australia’s interests to have a single coherent strategy to charging vehicles for using the roads, as it affects the sustainability and future of fuel excise duty.  I hope that decisions are made in coming months for the Commonwealth to investigate pathways towards transitioning how light vehicles pay to use the roads, and alongside that, how revenue collected from them can be managed and efficiently distributed.

It's important to note that the Commonwealth already has a clear role regarding how heavy vehicles are charged for road use.  Part of fuel excise duty is legally called a Road User Charge, which is what heavy vehicle pay to use the roads.  Owners of such vehicles are entitled to refunds of the remainder of fuel excise duty when being driven on public roads (and to receive a full refund when driven off public roads). The Commonwealth has already been piloting options for a long-term transition from fuel excise duty and (State and Territory collected) registration fees towards paying by distance and weight. There is already some knowledge and understanding of the relevant issues within the Department of Infrastructure, Transport, Regional Development, Culture, and the Arts (DITRDCA).

Could States and Territories design a RUC that is not illegal?

It might be theoretically possible to design a light-vehicle RUC at the State and Territory level that does not come within the definition of excise, as indicated in Vanderstock & Anor v State of Victoria.  Some of the characteristics of such a fee could include:

• It is a fee based on consumption of a service, not a tax. This affects how it is collected and how it is enforced.
• A fee that replaces another charge (aiming to be revenue neutral), such as replacement of registration fees. Arguably this would not affect demand for the “good” if it replaces a different type of tax. 
• A fee that applies to all types of (light) vehicles, which is also a replacement of registration fees, so it does not affect demand for one type of vehicle.
• A fee that does not apply to consumption out-of-state. Victoria's tax applied to distance travelled anywhere on public roads, making it more difficult to claim that it was about consumption.

I suspect States and Territories might investigate such options, if they are determined to implement a form of RUC, but there may be a preference to simply leave it to the Commonwealth. Motorists are likely to prefer this, but the political will to do it will depend on one government taking a chance (and needing to work with the State and Territory Governments, all of which control motor vehicle registers essential to making it work), rather than eight separate entities doing so.   

What does the Commonwealth need to consider?

Clearly the basis for having the Commonwealth proceed is that it is Commonwealth revenue being eroded by changes in vehicle technology. Given work already underway investigating RUC for heavy vehicles, it would make some sense to have a unified approach, which co-ordinates with States and Territories.

A wide range of issues would need to be considered including:

• What types of vehicles should first be moved onto RUC? Just those that pay nothing now (EVs), those that pay significantly less fuel tax (PHEVs and BEVs) or allow any light vehicles to opt into RUC?

• What would be the best basis for rate-setting? Should it be based on cost-allocation on a forward-looking cost base as has been proposed for heavy vehicles?

• Would it (and if so when would it) apply to vehicles currently paying fuel-excise and if so, how would fuel-excise be treated (i.e., refunded, credited to a RUC account)?

• What technical solutions would be suitable?  Automated options require equipment to be installed or existing telematics to be used, manual options require verification.

• Will technical solutions be piloted with a section of the public (as is being done for heavy vehicles)?  What would be the purpose of piloting RUC?

• Will revenues be hypothecated into a roads fund? If so, how would revenues be distributed among States and Territories compared to existing Commonwealth funding for roads?

• Would a Commonwealth RUC be applied at a single rate regardless of State or Territory, or have rates set that vary by location?  A location based RUC would limit the technical options that would be feasible.

• What entities would be responsible for operation and enforcement of a Commonwealth RUC? How would a high standard of customer service be ensured?

• What roles would States and Territories have with a Commonwealth RUC?

What now?

Regardless of what happens, there would need to be a significant Commonwealth role in any case. It would be costly and complicated to have potentially eight different RUC systems, all of which are focused on collecting data and money from vehicle owners in their own borders, and to enforce RUC across them.  It may have been less problematic for some (Tasmania, Western Australia and the Northern Territory all have low levels of cross border traffic), but much more complex along the eastern states and territory.  

Given States and Territories have generally made EVs exempt from registration fees and are unlikely to want to apply RUC more generally across all light vehicles, it seems likely they will now turn to the Commonwealth to get some direction around how it wants to approach RUC for EVs and RUC more generally. This is an opportunity to consider the wider road charging and funding framework across Australia, including the role of fuel excise and registration fees. RUC is inevitable for highly fuel-efficient vehicles, the question is not if, but when, but it should be considered within the wider context of the questions outlined above. 

With three US states having implemented RUC for parts of their light-vehicle fleets already (Oregon, Utah, and Virginia) and a fourth having mandated it (Hawaii), and multiple others piloting and investigating it (including the Federal Government), there is extensive experience in addressing many of these issues. New Zealand’s long standing RUC system will soon be extended to electric vehicles (it already covers all heavy vehicles, and all light diesel vehicles) also provides some useful lessons. There are also several pilots that have been undertaken in Europe.

The Commonwealth Government may not decide to do anything in the meantime, but that is a policy choice, and it could be undertaken with the clear message that it is intended to encourage growth in EVs and PHEVs. However, the easiest time to introduce a RUC is when the vehicles it is meant to apply to are few, and technical and policy options to do so can be easy to test.  Australia has time to develop a strategy for road charging that might place both heavy and light vehicles within a single framework. It would be wise to do so over the next few years, and take the chance to bring States, Territories, stakeholders and most importantly, the public with it. 

Cambridge cancels congestion charging and it isn't a surprise

I wrote in March 2023 about Cambridge's ambitious proposal for what it was calling a "Sustainable Travel Zone", but which was actually a congestion charge, and how it was not going well.

Well the BBC has reported that it has been cancelled, less than two weeks after revised plans were suggested that ought to have been the original plans in the first place.

I criticised the original proposal because its scale and scope were too ambitious, and because it offered little for those who would pay, as it was primarily designed as a revenue raising scheme, which had its scope defined by the amount of money local politicians wanted to raise to uplift the quality of its bus service.  £50 million was to be spent enhancing services.

As a revenue raising scheme that was also described as being intended to "reduce traffic" it is hardly surprising that those who faced paying didn't see what they would benefit from, especially as few could envisage how the proposed improvements to bus services were "better" than their own cars, and there was next to no effort made to sell the proposal on the basis that it might improve travel times for those who still drive.

From that objective came a scheme design that was blunt and ill-focused.  Why?

1. It was designed as an area charge, like central London's congestion charge, so there could only be a single charge per day regardless of how much driving was undertaken.  Those who undertook a single trip would pay the same as those driving commercially throughout the day.  
2. The area charge encompassed ALL of Cambridge. It effectively made the entire city into a congestion charge zone, regardless of how busy any streets were at any time, it priced the city for access, so those who drove towards the central city (who likely had other transport options for their trip) paid the same as those crossing from one side to the other (which would typically involve a less direct public transport trip).
3. The charge would apply all day, from 0700-1900.  So there was no effort to focus on peak charging at all, or focus on congestion.  Although it would initially only apply in the AM peak in 2025 to commercial vehicles it would expand to all day operation from 2027 for all vehicles that would not be exempt.
4. HGVs would pay exponentially more than cars, at £50 per day (perhaps £25 if zero emission) compared to £5 for cars.  It's unclear how Cambridge expected to function effectively by treating HGVs as if they take up 10x the road space of cars (and have no modal substitute) when they actually take up 2.5-3x the road space of cars.

There was a proposal for a low-income discount for some drivers, along with exemptions for those attending medical appointments and a range of other categories. However, much of this did not seem to help much with the public perception.

The public response to the proposals was highly negative, with protests, a petition and debates, plus the local election in 2023 seeing the Conservatives (who oppose the proposal, as it has been advanced by the Labour led Council) win a seat on the Council.

I suggested the proposal be scaled down, to peak only charges (with a half-price shoulder period), cordons rather than area charges (and two cordons, one around the city centre and one around the city edge) and a lower multiplier for heavy vehicles.  

Revised plans

At least one of those ideas was taken on board, with plans announced in August 2023 for peak-only charges (0700-1000, 1500-1800) and 50 "free days" for residents to be able to drive without charges, every year. A 50% discount would also apply to locally owned businesses using HGVs and vans, and a 50% discount for people on low incomes.

The revenue to be collected would only be £26 million per annum, but would be enough to implement significant bus improvements. Perhaps had the scheme been scoped like that from the first place, it might have had a chance of being implemented. 

However, it has since been abandoned altogether, not least because the Liberal Democrats have withdrawn support. The Liberal Democrats govern the neighbouring South Cambridgeshire District Council (which surrounds the city of Cambridge) and lead the Cambridgeshire County Council. As the proposed congestion charge has to be agreed by the Greater Cambridge Partnership Assembly (which includes representatives from multiple local authorities), it would be difficult to see it proceed without their united support.  The Liberal Democrats asked for a "pause" to investigate other sources of funding to upgrade the bus system. 

It appears this reflects increased national antagonism at measures which appear designed to penalise driving, and concern about the political fallout of supporting such measures at this time.

 Collapse and what now?

The final collapse of the concept came when the Labour group on Cambridge City Council withdrew support, out of concern for impacts on low income families. This is clearly not assuaged by the proposed 50% discount for low income households or the proposed 50 "free" trips permitted per annum for residents. What this all appears to be is a political reaction to a response to proposals that did not convince the public.

The Councils all still wish to upgrade bus services, and are not opposed to the fundamental objectives, but it is not clear how they proceed, short of recasting the whole scheme to include something  for those who drive.

I'm not surprised it has all faltered, in part because notwithstanding much of the public's stated interest in addressing environmental issues including climate change, there is much less enthusiasm in paying more in what are seen as taxes to pay for services that they do not see as benefiting them.

Assuming Cambridge still wants to proceed it needs to re-evaluating its policy around road charging to think more about one question - What will road charging do for those who pay?

There are two clear answers to this which it should consider:

1. What travel time savings and improvements in trip reliability will the system be designed to achieve?
2. Can some of the revenue be used to improve the road network, whether by addressing deferred maintenance or improving some bottlenecks or safety issues in the network?

Could Cambridge get a road pricing scheme it could accept?

This requires a very different mindset from that which treats pricing existing road users as a useful tax to pay for alternatives only. It doesn't mean that revenue cannot be used to support improving public transport and cycling, but it does mean that first and foremost pricing be used to improve the level of service of those who pay.

Cambridge

If the scheme were redrawn to be cordon based, or even zonal based, at peak periods only (and only in respective directions of travel) there would be a chance it could be focused on congestion and improving travel time reliability.  Cambridge has an awful road network for motorists seeking to avoid driving towards the centre to travel from one side to the other, (for example consider driving from the northwest to the southeast without following the city centre ring route) no doubt because local politicians didn't think that was important. It might help to think about the extent to which pricing should be focused on congested routes, particularly those with viable (or soon to be viable) competing public transport options.

A city centre cordon would be a reasonably elegant start, followed by a peripheral one that enabled vehicles exiting the M11 or A14 highways to avoid Cambridge altogether, or a few strategic charging points on bridges over the River Cam.  Pricing ought to reflect road space occupancy, so none of the 10x multiplier for HGVs, just make it 3x, with 2x for smaller trucks.  If pricing only operates at peak times there is less need for discounts and exemptions as well.

The use of revenue is important as well. Whilst Cambridge won't want to be seen to be replacing spending on maintenance with revenue from a congestion charge, it could consider whether deferred maintenance could be addressed or better yet, some small scale highly efficient road improvements that may make intersections work more effectively or address other localised bottlenecks or safety issues.  Using road pricing revenue for economically efficient road improvements is a net positive for the community, and with pricing there should be no concern about inducing demand, but rather improving the efficiency of the travel of those needing to use the roads. This means buses too, as well as light commercial vehicles, freight delivery and the like.

However, I fear that the ambition and the failure to recognise the need for road pricing to give something to those who pay has "poisoned the well" politically around the very philosophy of congestion pricing.  This is hardly surprising, as far too many of the advocates for pricing do so from an antipathy to private motoring, rather than seeing it as a tool to make roads operate more efficiently, and so be an opportunity to improve all travel.  It should not be a surprise to find that people who drive don't like paying more for what appears to be no benefit to them at all.  I would have thought the lessons of the failure to proceed with congestion charging in Edinburgh and Manchester 20 and 15 years ago respectively (and indeed the failure to even expand London's congestion charging scheme) should have been learned.

Hawaii becomes latest US state to legislate for road user charging

Following on from Oregon, Utah and Virginia, Hawaii is the latest US state to introduce road user charging (RUC) (called road usage charging in the US) as a revenue raising measure.  

Senate Bill 1534 has been signed into legislation by Governor Josh Green and is now Act 222, following two sets of pilots into distance based road charging in the State.

The Act does the following in respect of RUC:

• Eliminates the US$50 state annual registration surcharge from 1 July 2025. 
• Until 30 June 2028, requires EV owners to choose either to pay a $50 per annum fee or a per mile rate of US$0.008 (0.8c per mile) to be reported annually at vehicle safety checks. 
• From 30 June 2028, RUC will be mandatory for all EVs. 
• A plan is to be developed to implement RUC for all cars and light-duty trucks by 2033 and report to the Legislature about that plan. 

This is more advanced than RUC in any other US state, as Oregon, Utah and Virginia all provide the option of paying an annual flat fee and can then drive as many miles as the vehicle owner wishes. Hawaii will enable that option only until 2028, after that date, RUC will be mandatory. This is much closer to RUC in Victoria, Australia and in New Zealand.

More importantly, the legislation lays the path towards moving ALL light vehicles onto RUC, and therefore away from fuel tax, which is much more forward thinking than other jurisdictions (including Victoria and New Zealand).

RUC in Hawaii will effectively be reported using odometers, inspected at the state's mandatory annual vehicle safety inspections. 

Important to remember Hawaii not only has state gas tax that this is intended to progressively replace, but county based fuel taxes, and this program will aim to try to replace them as well (although not the Federal tax on fuel, which pays into the Federal Highway Trust Fund).

This followed an extensive pilot program to test RUC with the public in Hawaii, seen in the HiRUC final report here.  This website has a good description of that program. This followed the previous Hawaii Road Usage Charge Demonstration Program (PDF). 

Disclaimer: Throughout the Hawaii Road Usage Charge Demonstration and the HiRUC project, Milestone Solutions (now part of CDM Smith, and previously called D'Artagnan Consulting) was the lead contractor responsible for delivering Hawaii’s research and demonstration program including public and stakeholder outreach, policy and financial analysis, technical and system design, implementation, and evaluation of results. I worked on several elements of the HiRUC project.

Will New York congestion pricing encourage more US cities to follow?

The recent news that the New York lower Manhattan congestion pricing proposal has received Federal endorsement (which was needed as some of the roads to be charged are Federally funded) seems likely to be the last major barrier before the proposal can be actually implemented.  It has taken some time, not least because the Trump Administration neither progressed nor rejected the proposal.

The proposal is basically an area charge around lower Manhattan, which is called the New York City Central Business District Tolling Program.  This is a fair title as it probably isn't sophisticated enough to really justify the term "congestion pricing" although it should reduce congestion, it is essentially designed to raise revenue.  

New York congestion pricing concept map

There are some oddities about the proposal, notably that the road around the periphery of lower Manhattan is exempt from the charge, when for almost all trips is only worth driving on to access the zone within it.  It is notably also an area charge, which is a concept only implemented elsewhere in London (and then it was only because the Automatic Number Plate Recognition technology in 2003 had such a poor read reliability rate that the target was to get each vehicle to pass around three sets of cameras to be sure it would be identified).  So it will charge vehicles entering AND vehicles remaining within the area during operating hours.

Key characteristics

Vehicles will only be charged ONCE per day, so it won't penalise frequent movements (this will appeal to commercial traffic, but should dissuade some occasional traffic and regular commuters).

Residents earning less than US$60,000 a year will get a tax credit for tolls paid, essentially a low income exemption for residents of the zone. It is currently proposed that a 25% discount would apply for low-income frequent drivers on the full CBD E-ZPass toll rate after the first 10 trips in each calendar month (excluding the overnight period)

Emergency vehicles and vehicles used to transport people with disabilities will be exempt (the latter category could be quite extensive!).

A new entity called the Traffic Mobility Review Board would recommend the rates table, with prices to vary by time-of-day with a mandate to consider how traffic might move, effects on air quality, costs, effects on the public and safety.  Indications are that prices could be between US$9 and US$23 depending on time of day, with overnight charges of US$5.

Rates from midnight till 0400 must be no more than 50% of that of peak charges (you may question why there is a fee at all at that time, but this is because the main objective is revenue). 

Drivers paying existing river crossing tolls (not all river crossings have tolls) will get those tolls credited to paying the Lower Manhattan charge.

Charges will be levied by detecting E-ZPass toll tags. Vehicles without toll tags will be charged through Automatic Number Plate Recognition (ANPR) cameras which will be used to identify the vehicle's owner through Departments of Motor Vehicles, and be mailed to the owner. 

$US$207.5million is committed over five years to mitigate negative impacts including the low-income discount, monitoring of traffic, air quality and transit stations, 

Objectives and expected results

Officially the goals are:

• Reduce daily vehicle-miles traveled within the Manhattan CBD by at least 5 percent.
• Reduce the number of vehicles entering the Manhattan CBD daily by at least 10 percent.
• Create a funding source for capital improvements and generate sufficient annual net revenues to fund $15 billion for capital projects for the MTA Capital Program
• Establish a tolling program consistent with the purposes underlying the New York State legislation entitled the MTA Reform and Traffic Mobility Act.

1. Net revenues!  80% of net revenues will be used to improve and modernise New York City Transit (subway and buses), 10% to Long Island Rail Road, 10% to Metro-North Railroad. Zero revenue will be used to support even maintenance of the roads being charged let alone improvements to them. In effect, it is a transfer from motor vehicle operators to transit providers and their customers. Around US$1 billion in net revenues is expected.

2. Reducing congestion (although no formal targets have been set).  From the document filed with FHWA,  It is expected that there would be a 15-20% reduction in daily vehicles entering the charged area. Commuter car trips are expected to drop by 5-11%.  Notably through trips by trucks are estimated to drop by between 21 and 81% (these are trucks with no origin or destination in the zone).  Public transport trips are estimated to increase by 1-3% in the area.  The net effect outside the charged area is expected to be a reduction of 0-1% in overall traffic volumes. Effects on active travel are expected to be small.   Taxi trips are estimated to change ranging from a 1.5% increase to a 16.8% decrease in trips.

There are also intended to be modest improvements in air quality, but this is largely not being highlighted.

New York is fairly special

Lower Manhattan is unlike much of New York, let alone other US cities.  It has much more of the characteristics of central London, than indeed most US downtown areas, and it has a density of public transport availability that is unmatched in any other US city. This ought to make it the easiest location to implement congestion pricing, (even though it is pricing road use 24/7).  617,000 people live in the Manhattan CBD, but 80% do not own or have ready access to a car, this compares to 9% across the USA.  That is primarily by choice, because of the walkability of so much of this relatively densely developed area, the availability of public transport options, and the lack of parking for residents' vehicles. 

Manhattan car ownership compared to the US

Approximately 1.5 million are employed in the Manhattan CBD, of which 84% typically commute from outside the CBD (pre-Covid).  65% commute from other suburbs of NYC, 18% from New Jersey, 8% from Long Island, and 7% from other New York counties. 85% commute using public transport, 11% by car and the remainder by active modes, taxi/rideshare vehicle.  Again this is completely unlike commuter patterns elsewhere in the United States.

Manhattan commuter mode shares

The value of time of congestion lost in New York is estimated to be US$1,595 per driver per year in the NYC region, equal to 102 hours of lost time.  On one measure bus speeds have dropped 28% in the Manhattan CBD since 2010.

However it is far from being all about commuters, the data also indicates that 7.7 million people enter and exit the Manhattan CBD on an average weekday, 75% by public transport, but 24% by car, taxi, ride share vehicle or truck, indicating that there is a far more significant problem of all day travel in Manhattan than commuter peaks. This has parallels with other large dense cities such as London, whereby the motor vehicle traffic is largely not AM/PM peak commuter driven in the city centre.  The numbers of vehicles entering Manhattan CBD each weekday is equal to the entire population of Phoenix, AZ. 

The profile of this motor vehicle traffic is astounding. 

Profile of Manhattan CBD vehicle entry/exit

Volumes do peak inbound in the AM, but largely stay steady from noon until 2200 and outbound trip peak at 0700 and grow slowly until 1600 and then only drop off significantly after 2200.

This explains the desire to have charging across the day (although 2300-0500 seems excessive). 

This also explains why New York is special, as most other US cities do not have a CBD anywhere near as dominant or dense as New York. While most have a central business district of some importance (see Chicago, Washington DC, San Francisco), and could implement some sort of cordon or area charge in such locations, the scale and density of traffic in those locations does not match that of lower Manhattan.  Furthermore, it is critical to understand that any schemes would be unlikely to have a significant affect on traffic more widely across those cities. That's because most traffic movement in US cities does not starting or terminating in the downtown, but rather criss-crossing smaller commercial centres and locations of employment, as people live and work in a vast array of different places. US cities in most cases are highly dispersed. 

Even the New York scheme is not expected to have a significant impact on traffic beyond Manhattan, with an estimated reduction of 1% across New York City more widely. 

So if congestion pricing is to be implemented primarily to resolve congestion, unless the focus is the downtown area and roads approaching it, a downtown cordon is unlikely to achieve much from a network point of view.  

This is not to say there is not merit in targeting car trips to downtown areas at peak times to reduce congestion in those areas and encourage modal and time of day shift (and as a result free up some road space on corridors approaching those areas).  There certainly is, but congestion pricing has proven extremely difficult to implement in the US because there is excessive focus on revenue raising to support public transport, rather than improving the level of service for those paying to use the roads.

In US cities it is much more likely that significant improvements to congestion will be achieved not by pricing access to downtown areas, but by pricing corridors (and ultimately pricing whole networks).  Corridor pricing, as seen in Singapore, is much more likely to encourage the behaviour shift needed to optimise throughput on congested roads.  However to understand that, city planners and politicians have to broaden understanding of congestion pricing being just about encouraging modal shift, for it is just as much about changing time of travel and frequency of travel.  Indeed in US cities it is likely to be moreso.  In Stockholm, the data on behaviour change for that relatively large inner city cordon, indicates that only 40% of the reduction in car trips during charged periods was attributable to modal shift. That is certainly important, but the remainder is a whole set of other behaviours including:

• Shifting driving time from the peak period to the off-peak period (with lower charges) or uncharged period either in one direction or both directions of travel.
• Reducing frequency of driving, by consolidating appointments and activities into fewer trips.  This means the same productive activities were able to be carried out with less frequent driving. 

To date the main policy focus from cities in the US wanting congestion pricing has been an eye on revenue, which is understandable, as there is a lot of potential to raise money. However, public acceptability is rarely built upon what is seen as a new tax.  Lower Manhattan is special because most people who live there don't have a car, and most people who commute or travel into it, don't do so by car, but although none of the net revenues will be used to directly benefit those paying, there IS a focus on achieving results in terms of reduced congestion. 

The Traffic Mobility Review Board is a good measure to ensure that the policy and rate setting around the scheme will deliver net benefits, although the membership of the Board is required to have one member recommended by the Mayor of the City of New York, one member reside in the Metro-North Railroad region, and one member in the Long Island Rail Road region.  The board composition is available here.

My expectation is that there will be more studies on congestion pricing/charging, but getting public acceptability for it will continue to prove difficult. That is because far too many developing such programs are focused on raising revenue, without thinking about how pricing can improve conditions for those who still drive (New York has not ignored this). Some ignore the enormous benefits pricing can deliver to improving bus capacity and reliability, just because of reductions in congestion. Finally, far too many look at a program like New York (or London) and just try to copy it, rather than thinking more broadly about the ways congestion pricing can be implemented on a road network.  There are far better examples than London, and more sophisticated systems and policies in place in cities such as Stockholm and Singapore, but it is entirely possible to do something quite different, and be effective.

Congestion pricing needs to be led by policy objectives and be tailored carefully to local conditions. A key reason it failed to expand in the UK beyond London is that too many advocates did not seek to design to target congestion, but to target potential revenue, and far too many wanted to communicate to those who they wanted to spend net revenues on, not those who would pay.

After all, congestion pricing that doesn't reduce congestion is just another tax.

What next?

The scheme can be implemented around early to mid 2024, after contractors, design, build, install and test equipment to be installed at the roadside.  Meanwhile the Traffic Mobility Review Board will develop recommendations for a rate schedule, which will need to be approved by the MTA Board for public consultation and hearings, before final decisions are made. 

It can only be hoped that its implementation is a great success, that it meaningfully reduces congestion in lower Manhattan (and the routes approaching it), that this improves air quality and improves mobility overall, and helps to catalyse thinking across the United States about the merits of congestion pricing.

However, most of all I hope it catalyses thinking about how congestion pricing needs to be tailored for each city, to meet its needs, its objectives and to develop the public acceptability needed to avoid it being a major controversy.

London, after all, became the first and to date the ONLY large city in the UK to implement congestion charging, and it remains only applied to the centre of London (hopefully more journalists will not think the Low Emission Zone and Ultra Low Emission Zones in London are congestion charging zones, they absolutely are not). 

 

Consultation on Cambridge's Sustainable Travel Zone reveals widespread opposition

I wrote a couple of months ago about how poorly plans for a blunt congestion charge for Cambridge (UK) were going, in terms of public response, and this seems to be continuing following publication of the results of formal public consultation into what is being called a "Sustainable Travel Zone".

The Sustainable Travel Zone would be a single area charge (£5 for cars but much more for trucks) across virtually all of metropolitan Cambridge, which would operate 12 hours a day weekdays only. It would legally be a congestion charge, and would effectively emulate London, except for its scale of operation. Whilst the London congestion charge only affects a tiny proportion of greater London (separate from the Ultra Low Emission Zone), the Cambridge Sustainable Travel Zone would affect all of Cambridge. Why? It would appear to be to ensure that it would raise enough money to pay for the significant increase in bus services.

Rarely have congestion pricing schemes ever been publicly accepted if sold on the basis that it is about raising money (effectively a sophisticated form of tax) rather than reducing congestion. The record in the UK is that several cities have attempted to progress congestion charging on the basis that it would raise a lot of money for public transport (see Manchester and Edinburgh), and been rejected by the public.

By contrast, congestion pricing has been successfully advanced in Stockholm because it was about reducing congestion, whereas it saw considerable opposition in Gothenburg because that is about raising revenue. It is difficult, although not impossible to get support for such a scheme as a revenue raising instrument, but it would appear to be that people in Cambridge are not warm to the idea.

Cambridge News reports that although 70% of the population supported the transport improvements, 58% opposed the Sustainable Travel Zone/congestion charge. Only 34% supported the Sustainable Travel Zone as proposed. 

Another report breaks down the results in more detail:

61% of those aged 16-24 who responded to the consultation were in favour of the charge

64% of those aged 55-64 opposed the charge.

Of those living within the proposed zone boundary, 49% were opposed and 46% in favour.

Those living outside the boundary were 60% opposed, 32% in favour.

Key concerns expressed were those wanting more exemptions, thinking the £5 charge was too high and thinking residents should have an exemption.  Many wanted Addenbrooke Hospital excluded from the zone. 

So what now?

29 June is the date when the Greater Cambridge Partnership meets to consider what to do next. It could just plough on, but it may be better to think about some of the ideas I wrote about before on how to phase in charging.

1. Just introduce it in the AM peak only at first, in part to demonstrate the effects, but also to encourage some time-of-day shift in travel (which many would rather do compared to shifting mode). It would also give some idea of the elasticity of demand in the AM peak for driving to better inform forecasts for revenue. Sure it won't be enough revenue longer term, but then the improved public transport package can be focused on the peaks instead. Expand it to the PM peak later, as that would capture more traffic likely to mode-shift, rather than inter-peak traffic. 
2. Replace the blunt area charge with two cordons.  One in the city centre (whether it is a tight city centre or one bounded by the effective ring roads of the A1303, A1334, A603), one at the proposed outer boundary.  This means people won't be charged for simply moving their cars short distances, and will focus attention on entering Cambridge and then central Cambridge. 
3. Have a shoulder charge (at half price) for the first and last half hour to encourage time of day shift and provide more options for motorists.
4. Dedicate some of the net revenues to some improve road infrastructure this means fixing substandard intersections, and although there will be resistance to using the money for maintenance (as it would reduce funding from other sources), some of what motorists pay should benefit them.

It is plausible that the full Cambridge scheme could be introduced over time, but any combination of the above ideas can provide a pathway of phasing it in. Say an inner cordon could operate 0700-1900 (with a half hour shoulder fee), but the outer cordon only 0700-1000 and 1600-1900.  

 

Denmark implementing heavy vehicle RUC from 2025 - but not without protest

Initial Danish heavy vehicle charge network

From 2025 Denmark will be the 12th jurisdiction in Europe to have some form of distance-based road user charging (RUC) (or tolls) for heavy vehicles.  Some may argue about the definition (as two of these are essentially network tolls using tolling technology) but the others are Iceland, Switzerland, Germany, Austria, Czechia, Slovakia, Poland, Hungary, Belgium, Bulgaria and Russia.

Key elements of the new scheme, called the "Kilometer-based toll":

• On 1 January 2025 all heavy vehicles with a Gross Vehicle Weight of 12 tonnes or above will have to pay per-kilometre road user charges based on the vehicle's weight and emissions rating. This will apply on the national road network and other main roads, including public roads in "environmental zones". This is a network of around 7,300 km (around 9.7% of public roads, but the roads that carry most of the freight traffic).
• On 1 January 2027 the charge will be extended to all heavy  vehicles of 3.5-12 tonnes Gross Vehicle Weight as well.
• On 1 January 2028 the charge will apply to all public roads in Denmark (a network of around 75,000km).
• On 1 January 2025 Denmark will withdraw from the Eurovignette scheme, which applies to trucks 12 tonnes and above, and requires trucks to prepay a set number of days they are driving on the national road network (trucks can buy an annual Eurovignette).

Average charges will be DKK1.2 per km in 2030 (US$0.17 per km). 

The policy focus is on reducing CO2 emissions. It will apply to all trucks with a gross vehicle weight of 12 tonnes or more. It will be expanded to heavy vehicles of 3.5 tonnes and above from 1 January 2027.

It is being introduced alongside multiple complementary measures:

• Rules on weights and dimensions for trucks on Danish roads are to be eased, enabling larger and heavier trucks to operate
• Improvements to rail freight in Denmark including a loans scheme for rail freight operators.

There will be a single rate geographically across all major roads in Denmark (it will not apply to local roads), with a higher rate for cities with low emission zones. The charge will automatically collect higher fees for the low emission zones.  There will be no VAT as it is legally a tax.

Exemptions

Only the following heavy vehicles will be exempt:

• National armed forces and emergency services vehicles;
• Vehicles adapted and used exclusively for fire and rescue;
• Police vehicles; and
• Vehicles belonging to the "road services" (believed to be maintenance/operations)

Implementation

Unlike almost all other implementation of heavy vehicle RUC anywhere, Denmark is taking a technology neutral approach to how data is measured and collected from heavy vehicles to enable collection of the charge.  Given the number of similar schemes in Europe, it called for accreditation to be a certified service provider, meaning that as long as a private commercial toll/RUC service provider could meet the performance requirements specified, it could be certified to collect the charge.  Denmark has received six application to do so after the deadline of 30 April (to enable initial operation) from the following firms:

• Brobizz (Denmark)
• SkyttelPASS A/S (Norway)
• Telepass S.p.A. (Italy)
• tolltickets GmbH (Germany)
• Toll4Europe GmbH (Germany)
• ØresundPAY (Sweden)

This does not necessarily mean all or any of these operators will be certified, but indicates Denmark has taken an open system approach in encouraging competition in delivering RUC services to heavy vehicles in the country. 

The project is being led by the Danish Road Directorate, but the contract for establishing it was granted to 

Sund & Bælt, a Danish government enterprise responsible for some major infrastructure projects such as the Øresund Crossing between Denmark and Sweden. 

The remuneration of EETS providers will be done under two categories:

• A fixed percentage of the revenue collected (1.5% for the calendar year 2025 and 2% for the subsequent year)
• A fee based on the number of active OBEs (On Board Equipment). An active OBE is an OBE that has been provided by the EETS Provider and installed in a vehicle registered with the EETS Provider, and for which circulation on the tolled road network has been detected at least once for the respective calendar month. (DKK60 per month (US$8.66) for the calendar year 2025, down to DKK15 per month the following year (US$2.17). 

Consider if a Class 5 above 32 tonne truck travelled 100,000km in a year (outside LEZs), it would generate DKK20,000 (US$2885) in gross revenue, so the EETS provider in the first year would obtain DKK300+DKK720=DKK1020 (US$147). So volumes of business matter (and it also encourages EETS providers to target the higher emitting vehicles that generate them more revenue).

Number of vehicles and kilometres driven

Number of trucks registered in Denmark in 2021

Initial installation will be for 35,500 locally registered vehicles, but the foreign vehicles are not included in this.  

Distance driven on Danish roads by heavy vehicles

The total distance to be driven by vehicles subject to the RUC is depicted above.

User experience

It is expected that regular users of the Danish road network will have a contract with an EETS provider (European Electronic Tolling Service) which will supply or use telematics installed in the vehicle.  The vehicle owner will pay the EETS provider, which will then pay the charges to the government.  Denmark is neutral about whether the EETS provider uses On Board Units already installed on trucks, new ones or uses the telematics system already built into some trucks.

Occasional users of the network (visiting trucks from foreign countries that infrequently enter Denmark will be able to buy a single trip ticket for a specific journey online, through the website of the "toll charger" (which is Sund & Bælt). 

Charges

The rates table applying from 1 January 2025 is seen below, it differentiates between three weight categories and five emissions categories with higher rates in low emission zones.

Denmark heavy vehicle RUC charge table

As can be seen rates range from DKK0.20 to DKK2.03 per kilometre (US$0.03 and US$0.29 per kilometre or US$0.048-US$0.47 per mile).  Note this replaces a rate structure of the Eurovignette below:

Eurovignette in DKK

This starts at DKK89 for one day on the network (US$12.85) to up to DK1755 for one year (US$2534), which depending on how much distance a truck travels on the network will determine if it is going to be paying more or less with the new kilometre-based RUC.

Impacts

The burden on Danish business is estimated to be DKK2.5b (US$370 million) offset by DKK1b (US$140m) due to the measures to enable larger trucks on the roads, so the net impact will be US$230m per annum by 2030.

It is estimated to reduce emissions by 0.4 million tonnes by 2030, but with 0.3 million tonnes coming from the road user charge and 0.1 million tonnes by allowing larger trucks on the network.

Summary leaflet here

Opposition

An organised opposition group "the Road Tax Committee" has been set up to oppose the proposal and it has been engaging in protests by blockading roads.  Some of the trucking industry is calling for a delay to implementation until 2030, largely so there are more lower and zero emission trucks available to purchase, so they would not face the highest charges.  The "Road Tax Committee" has since dissolved, but protests and opposition continue.

All of this indicates how important it is to get some support from the trucking industry before introducing charge that are, by and large, likely to charge many of them much more than they do now.

It seems challenging to introduce any form of road user charging without intending to ensure that net revenues will be used to, at least, ensure the road network is well maintained and managed, but there is little expression of this. The messaging is focused on fighting climate change, and nowhere else has this been seen by the trucking industry as a policy it can support. France tried this previously with the abortive Ecotaxe proposal (which I wrote about extensively over nine years ago).

In every other European jurisdiction that has managed to implement heavy vehicle RUC, the objective has been clear - the need to raise revenue from the vehicles that generate the most damage to the road network, including those from foreign jurisdictions. A secondary objective with some has been to encourage more environmentally friendly vehicles, but that is reflected in preferential rates for low emitting vehicles, it is not the primary objective. I would not be surprised if protests continue in Denmark until there is some recalibration of the objectives and policy. 

Hopefully Denmark can reach a point where it finds compromises that brings the trucking industry with it, whether it be about timing, the rate structure, the use of net revenues or any combination of the above (or even consolidating other taxes), so that it too can join the list of jurisdictions with RUC. Bear in mind that it will need to progress it to replace fuel tax revenue in the medium to long term as well.