Copenhagen congestion charging looking less likely

Last year, the government in Denmark changed, with the election of a leftwing coalition which included in its coalition agreement a commitment to introducing congestion pricing in Copenhagen.   I wrote optimistically at that point, as it appeared that the real debate was not about "if" it should be introduced, but "how".

Original cordon concept for Copenhagen congestion charging

Yet no one should underestimate the politics around congestion charging.  The real push for charging in Denmark has been from the Socialist People's Party (a green/socialist party) which had it as a core part of its platform to reduce traffic and emissions in Copenhagen, and to boost walking, cycling and public transport as an alternative.  The party leader pushed in the elections that he would slash public transport fares with the revenues from the charge, which gained support among non-motorists in Copenhagen.   However, the SPP has only 16 out of the 179 seats in the Danish Parliament, compared to the senior partner, the Social Democrats (a centre-left party) which has 44 seats, and is significantly more sensitive to public opinion.

The core problem is that the modelling of future revenues proved disappointing.  According to the Copenhagen Post, the revenues were estimated to be less than half of the DKr.2 billion (US$352 million) originally forecast, dashing hopes that congestion charging could fund a major cut in fares and major capital works on the scale envisaged.  

Opposition to the concept was strong among business leaders, and the opposition Venstre party (free market liberals - which is ironic given the attribution by some that congestion pricing is a market oriented approach), but it was the opposition from local leftwing politicians, aligned to the two main parties in government, that made it increasingly embarrassing for the central government.

So the result is that congestion charging has been shelved, for now.  The government announced it is spending DKr 1 billion (US$176 million) on improving public transport and reducing fares in February 2012, and created a Congestion Commission to look at long term solutions to addressing congestion and air pollution in the city.

Yet that Commission is having problems of its own.  It cannot get agreement among its 24 members about potential solutions.  It is meant to report on recommendations by 1 January 2012, but the Commission is deeply divided between business representatives (opposing charging) and environmentalists (supporting it).

A Copenhagen Post article claims the government is optimistic an outcome will be reached, but the Venstre Party believes it is too divided.

I previously wrote about how I thought Copenhagen should go about it, describing the main proposal for a cordon around central Copenhagen. For it should not simply consider the single cordon, it should not just consider a cordon ala London, but consider how similar type systems exist in Italy and Singapore.  

The key is really to not be wedded to a single concept, to consider experiences elsewhere and to develop options that not only mean pricing is more discreetly targeted at congestion, but that the net revenues are used for some combination of new capital investment in the transport network of the charged zone and/or tax relief for businesses in the zone.

It is notable already that there is support by some other political parties for congestion pricing in Copenhagen, but not the cordon solution previously described.  The Radical Left party (Radikale Venstre - socially liberal centrist party) is also part of the coalition, with 17 seats.  It is glad the concept has been scrapped, but it support GPS based distance based road pricing.   The party's transport spokesman, Andreas Steenberg, claims the opposition Venstre and Conservative People's Parties share that view.

Bearing in mind that Denmark is also pursuing GPS based road pricing for heavy vehicles (more on that soon), this is consistent with such an approach.

Conclusion

It appears unlikely that Copenhagen will get congestion charging in the near future, partly because only one of parties in government is still pushing it, but also because the concept being supported is insufficiently flexible or targeted enough to avoid criticism from businesses that the impact will be blunt.

My guess is that the Congestion Commission will agree that pricing could reduce congestion and emissions, but disagree about how it should be implemented and what it should look like.   I suspect the cordon option, unless radically altered, will be gone, but that talk of GPS based pricing will remain.   If so, whilst GPS based distance charging in an urban environment would have many advantages, one of them is not cost and another is not rapid deployment.

It can be sure that if there is a lot of support in Denmark for the broad idea of charging to manage traffic demand, then the GPS option will remain for some time.   The political advantage of that is that it can always be said to be too risky to do at present, but that offers little for relieving traffic congestion in Copenhagen.

Copenhagen congestion charge looks likely with change in government

In August 2011 I wrote on how the debate on congestion pricing in Copenhagen has largely evolved from "whether" to do it, to "how" to do it.   The recent change of government in Denmark from a centre-right to a centre-left coalition means that it looks like the debate has moved further in that direction, which looks like the one reflected by Lord Mayor of Copenhagen Frank Jensen, and Mayor of Rødovre Erik Nielsen.  The new government supports introducing a congestion charge, but the Mayor says the exact location and price of the charge is still up for debate.

According to the Copenhagen Post they just want to debate the how, not the whether:

we are thoroughly convinced that far more people will benefit from the congestion charge through a reduction in the amount of time they spend on the road and in terms of a cleaner environment. Major investments in infrastructure and public transport will alleviate some of these inconveniences, but it is paramount that we discuss where exactly the borders of the congestion charge zone should be drawn in order for it to have the greatest possible impact and fewest possible inconveniences for people living in the region. A congestion charge is a way of financing major improvements in our transport infrastructure. By improving public transport and lowering ticket prices, we hope that many commuters will transfer from privately owned vehicles to public transportation so that the Copenhagen air will be cleaner and the city will be more accessible for everyone

So there is a strong belief that the charge will be transformational for Copenhagen, which may well be true. It is not a timid vision

The Copenhagen Post reports some details about what a charge would look like:

by 2012 toll facilities would be set up at the city’s northern edge, along Ring Road 2, and through inner Amager to the south. Fees to enter or leave the zone would vary depending on the time of day, but according to the proposal rush hour fees would be 25 kroner (US$4.66). The yearly cost to a commuter crossing the toll ring daily during the rush hour would amount to 11,100 kroner (US$2,069).

Concept for Copenhagen congestion charge

The map on the right is a depiction of what the cordon would look like and is what Tetraplan consultants modelled for the charge.

A Worldwatch Institute report states:

A study by Tetraplan consultants shows that a congestion charge can reduce road traffic by 23 %, air pollution by 5 to 10 % and CO2 emissions by 10 to 15 %.

The Social Liberal Party argued that there should be national road pricing by distance using GPS.  The Copenhagen Post also quotes an expert who also is not keen on the cordon:

Harry Lahrmann, a traffic researcher with Aalborg University, also argued that road pricing is a more effective solution and that the congestion charge would create more traffic from motorists taking detours.

“Experience from England and Sweden suggests that while traffic within the zone decreases, it increases outside it,” Lahrmann said. “Motorists will still be queuing on the Køge Bay Motorway if a congestion charge is introduced. Road pricing using GPS is the only real solution.”

However, with the change in government it appears that there is a far greater chance of this solution being implemented.  This is despite criticism from motorists' lobbying group FDM, which argues that car drivers in Denmark are already heavily taxed (with 25% VAT on the purchase price and a 105% purchase tax on vehicles up to a price of around US$14,000 (180% on every DKK above that)).  The Danish Chamber of Commerce claims that the charge would damage trade and business in Copenhagen.

Criticism is lining up according to the Copenhagen Post, as one survey indicates only a third support the idea.  The Danish Construction Association claims it wont be financially viable until 2025.  The Copenhagen Post reported that traffic and pollution expert Kåre Press-Kristensen from the Ecological Council, told Politiken newspaper that the zone would have a negligible impact on fine particles air pollution, which can cause respiratory illnesses...If the goal of the congestion zone is to reduce pollution, then I’d have to say that as it stands it won’t have much effect. I would anticipate that pollution will drop by between seven and ten percent, with a five percent margin of error".  One reason being that Copenhagen already has good air quality.

The Copenhagen Post itself thinks the better option is national road pricing saying wisely:

a more equitable way to accomplish the same goals would be a national road pricing system that charges drivers based on where, when and how many kilometres they drove, rather than on whether they crossed an arbitrary line.

Another benefit road pricing has over a congestion charge is that it could replace the current tax and registration system, which punishes car ownership, not car use, and makes it cheaper to buy new, fuel-efficient cars. Due to the high purchase price of new cars, Denmark currently has the oldest average age of cars on the road of any country in Europe. Moreover, its “weight charge” puts relatively heavier, but more efficient, hybrid cars well out of the price range of the average family.

The Copenhagen Post is right, but road pricing should not exclude congestion pricing as well.  It's solution that distance charging should be done by odometer is mistaken, because that is fraught with enormous potential with fraud (New Zealand's experience with light vehicle road user charging, which I am familiar with, shows the risks of that approach).   However, is it not refreshing that a major newspaper is arguing about how to introduce road pricing, rather than simply opposing it?
  

What intrigues me is the statement that the charge will in part be used to subsidise lower public transport fares.

Two billion kroner (US$373 million) total is expected to generated from tolls, however, and this money would be put towards reducing the price of public transport by 40 percent, resulting in an average savings of 5,192 kroner (US$968) a year.

The advocates of congestion charging in Copenhagen are hoping for a major mode shift, and given they are advocating reducing public transport fares, this is likely to happen. Yet this doesn’t appear to be economically rational.

The fundamental reason why urban public transport demands subsidies is because much of the capacity is needed only for peak trips largely in one direction. During interpeak periods, between half and three-quarters of public transport network capacity sits idle. The subsidies effectively meet this, and the economic justification is because, in the absent of efficient road pricing, car commuting is underpriced at peak times. Once peak time car commuting is efficiently priced, it will in itself encourage more trips to go by public transport, but there is then a case for increasing fares so that those users now pay the full costs of their trips.

In short, setting aside social policy reasons for public transport subsidies, the economic efficiency argument for urban public transport subsidies is eroded when you have congestion charging because you no longer need to price public transport cheaper than car traffic through subsidies. The congestion charge should price road traffic at a rate to ensure the network operates efficiently.

Beyond the economics, I believe the Copenhagen Post is right in pointing out that communication to the public is critical.  Motorists need to get something in return, which means that at least some of the revenue should go to improving roads, or in reducing some motoring taxes (in particular, Denmark's punitive tax on new cars must have a negative impact on those wishing to buy new more fuel efficient cars).  I have watched how failed communications strategies and overall strategies brought down plans for congestion pricing in Edinburgh and Manchester.  Copenhagen needs to learn the unpublished lessons learnt from those disasters.

Some of them are:

-  Get your concept well designed, ensure it does reduce net congestion, that it targets congestion well and does not have too many exemptions;
- Decide what you will do with the net revenue, and make sure motorists get some of it back in some way;
-  Take charge of the communications strategy and make sure you spend good money on leading the clear simple messages of the proposal and you can answer all of the critics;
-  Spend good time talking to business and road user groups, make sure they understand what your objectives are and why you are choosing the option you have selected;
-   Don't get blinded by technology, be clever with vendors.

I hope Copenhagen can find a solution that meets its needs, but I would urge it to avoid using charge revenue to cut public transport fares, or to ignore giving motorists anything at all.   I have sympathy for the view that perhaps a distance based approach could create less distortions, but there is no reason why a small area charge can't deliver some benefits for the city.  However, the solution should not be dictated by what economic modellers can model, traffic engineers can imagine or what looks elegant on a map - it should be determined by whether it can deliver net benefits to the city.

I suspect the next four years for road pricing in Denmark will be interesting indeed.  For not only does the new government want to introduce congestion pricing in Copenhagen, but it wants to introduce road pricing for trucks across the country.  More on that later.

Copenhagen debates road pricing

You know that debates about transport policy in a city have matured when the debate about road pricing isn't about whether to do it, but how to do it and how much it will cost.

Copenhagen has long talked about some form of congestion charging, following on from experiences of their brethren in Stockholm and of course, London.  This report (PDF) commissioned by the Forum of Municipalities for Copenhagen a few years ago, gives a graphic description of how Copenhagen congestion pricing might work.  It modelled results for a variable all day cordon charge, operating in both directions as follows:

Monday-Friday:  

25 DKK (US$4.84) 0600-1000, 1400-1800

10 DKK (US$1.94) 0500-0600, 1000-1400, 1800-2300

Saturday-Sunday

10 DKK (US$1.94) 1000-1700

It is notable that weekend congestion is considered serious enough to charge for as well.  The proposal was for improvements to public transport, cycling, park and ride and some selected road improvements (and major ITS infrastructure to manage traffic) to be financed in advance and paid for by the charge.  The result modelled was a 23% reduction in traffic within the cordon, and 4% reduction across greater Copenhagen.   More generally, the report indicates positive environmental results, and the negative effects on users are fairly minimal and evenly distributed.   The report is light, but most interesting to me was the proposal to have a commercial company responsible for the system and the management of the revenue, which is likely to deliver better results to users and in terms of risk management.

The most recent debate has come about because the opposition Social Democrat and Socialist People's Party have come out campaigning for a Copenhagen congestion pricing scheme.

The Copenhagen Post reports them saying "A congestion charge in Copenhagen will raise 2.2 billion kroner a year if we charge 40 kroner during rush hour and 20 kroner outside of rush hour with the system costing 200 million kroner a year to run".  2.2 billion DKK is about US$425 million, 40 DKK about US$7.75 and 20 obviously about US$3.87.

The idea is essentially for a cordon based charge, and the centre-left Social Democrats want all of the net revenue to be used to improve public transport, or reduce public transport fares.  Quite how much spare capacity Copenhagen public transport has to cope with the mode shift is unclear, particularly when such a flat and easily walked (and cycled) city may mean reduced public transport fares shift people from walking and cycling.  

The Socialist People's Party is a more hardline leftwing party akin to the "Green" parties of other countries, so the two left wing parties are clearly appealing to environmentalists and non-car users in the country.  

Now you'd expect criticism of the scheme from the government to be all about favouring motorists and opposing road pricing.  However, it is more nuanced than that if you read responses to the proposal in the Copenhagen Post.  Whilst motorist lobbyists and businesses have said road transport is already too heavily taxed in Denmark, the centre-right (leading party in government) Liberal Party slammed the proposal as being too expensive for motorists, and for putting an unnecessary barrier up in the city.  It also claimed public transport couldn't cope with the mode shift, and that the charge would be "arbitrary" in terms of its effects.

However, the centre-right Social Liberal Party (which is in opposition) suggested distance based national road pricing would be preferable, by saying that:

"The brilliance of road pricing is that you can regulate how much motorists pay according to how much they drive, where they drive, when they drive and what they drive. And motorists from areas without public transport would not pay".

Now that doesn't mean Copenhagen will be getting congestion pricing anytime soon, but it does mean the debate has been moving on.  The key to making progress is likely to be talking about a tradeoff between implementing national road pricing, there being a congestion "premium" for Copenhagen, and partially offsetting existing taxes on motoring.

I don't doubt that congestion pricing could make a positive difference for Copenhagen, but in a land where motoring is so highly taxed, merely taxing it more to pay for public transport is not only unlikely to get sufficient support to proceed, but also failing to deliver real benefits to motorists that do not generate the congestion and environmental problems that advocates are seeking to address.

Surely a leading candidate in Denmark is to replace very high registration and ownership taxes with a form of road pricing.