There are many different ways to judge the past year in road pricing and tolling; by geography, by type of road pricing system, by technology or by public discourse. There have been no single dramatic steps in any direction in the sector, so I prefer to look at it as a series of trends which vary according to the economic conditions of particular regions and countries.
1. Tolling new highway capacity is becoming more widespread: Whether it be in countries enduring economic malaise (in Europe or North America) or those booming (in Asia), the traditional model of tolling new road capacity is becoming more popular among policy makers. The key drivers in developed countries are obvious, as it is a way of raising revenue that avoids putting pressure on taxpayers and on sovereign debt levels. In developing countries, it is a way of managing demand and putting roads on a commercial basis to encourage private investment (and the commensurate incentives on project delivery and innovation) into highway investment. In the UK, the government has revitalised interest in getting new highway projects at least partly toll financed. In the US, many states are advancing tolls as a way of financing new projects, including replacement of existing infrastructure. In Indonesia, China and India, major corridors are being built with toll funding. Certainly, new continental European toll roads are scarcer, in part because of extensive construction in many countries in recent years, but in eastern Europe and Russia toll roads are still being developed.
Nevertheless, in South Africa the limits of tolling existing capacity to fund improvements appear to have been reached. Whilst the Gauteng Freeway Improvement Project will proceed with tolls, it is a difficult sell to only toll some existing roads for funding improvements on them and some new roads. Yet this trend is still set to continue, as conventional sources of revenue prove inadequate to support some large capital investments.
2. Fully electronic free flow toll conversions are spreading in the US and Europe: Whilst manual tolls (and automatic coin machines) have been the bread and butter of tolling systems across the world, increased labour costs and the delays and pollution caused by stop-start traffic at toll plazas means that conversions to free flow tolling are becoming increasingly common after some years of slow progress. The benefits are clear in terms of reducing congestion and improving service, but cost savings are only seen if labour costs are high and the systems and business rules in place to allow for efficient billing and enforcement. This trend is appearing in the US in several states, particularly in urban locations where the delays of manual tolls are obvious, but also locations such as Puerto Rico and the UK. Similar shifts have already happened in Australia and there is further interest in moving electronic in some European countries. Electronic free flow in the developing world is hindered by neglect of systems necessarily to enforce fines by post.
3. Slow progress in congestion charging beyond varying tolls on existing roads in developed countries: No new cities introduced congestion charging, indeed London's congestion charging area halved in size as the Western Extension was abolished with little net effect. In Europe, Gothenburg continues to develop its scheme which will open in 2013. Whereas the new government in Denmark is keen on introducing congestion charging for Copenhagen. Elsewhere in Europe, interest is more muted with Budapest showing continued interest, and Zagreb largely driven by the need for revenue. In the US, debate in New York is also revenue focused, but building up some healthy momentum. Elsewhere in the US, San Francisco is the other city which has made the greatest progress in implementing congestion charging on existing roads. However, its greatest progress has been introduction of the variable parking pricing trial, also now trialled in downtown LA. Another trend has been the ongoing spread of HOT lanes and interest in HOT lane/toll lane solutions as a way of implementing a form of congestion pricing, as well as introducing congestion/peak toll rates on existing toll roads. Outside the US, Israel interestingly appears to be the main example of HOT lane application. The key pressure in developed cities is the economic climate which is suppressing demand and congestion, making cities less keen to impose new charges on motorists. Revenue pressures in most cases do not override the interest in encouraging economic activity. There is almost no interest in using congestion charging to replace existing taxes. However, the Dutch trials called Spitscoren and Spitsvrij show a different way of managing congestion - by rewarding regular users when they don't drive.
4. Growth in interest in congestion charging in megacities in developing countries: Notable are both Jakarta and Beijing showing interest in congestion charging because of the chronic gridlock (and in Beijing's case severe air pollution) due to growth in road traffic. The Indonesian government's interest in passing a law to allow five cities to introduce congestion pricing is significant and Jakarta is making substantive steps in adopting the Singapore approach to road pricing. Beijing has not gone so far, but there is interest in several Chinese cities in the concept, although the means to actually implement it may be more difficult. Tehran continues to be the great developing world success story.
5. Heavy vehicle network tolls continue to expand in Europe and interest revived in Australia: Poland is the latest country to introduce distance based tolls across the national highway network, the next ones will be France, Belgium and possibly Denmark. Interest has grown purely for fiscal reasons, with the possibility that Spain, Finland and even Ireland may look into it in coming years. Australia is engaging on whether to shift from fuel tax and ownership taxes to distance charging for trucks, but is likely to continue investigating options in the shorter term.
6. Replacement of fuel tax with road pricing has growing interest in the US, but faces considerable issues of transition and public acceptability: The politics of increasing fuel tax in the US seem insurmountable, so various states are moving forward to develop options to introduce distance based charging (mileage based user fees in the parlance of some) to replace fuel taxation. Oregon is at the forefront of this, although is doing so to set up a system to cover vehicles that do not pay fuel tax. However, the revenue sustainability advantages of road pricing are becoming clear, along with options to better target pricing and address congestion issues in the long term. The biggest issue is how to implement such an enormous transition in how to pay for road use. Australia is acknowledging the issue as well, and will likely introduce it on heavy vehicles as the first step. This is likely to see the greatest development in coming years as it involves a revolutionary change in a combination of vehicle technology, taxation, public policy and highways governance, and potentially offers enormous benefits (but faces enormous risks).
7. Technology is quietly making smartphones as sophisticated as any bespoke on board units: The great leap forward in recent years has been 3G (and soon 4G) technologies that mean smartphones can now effectively run the applications necessary to do sophisticated time, distance and location based road pricing, if they can be correlated to a vehicle, maintain security and be adequately calibrated. There is interest in the toll industry in doing this, but it is partly constrained by the proliferation of government agencies involved in running toll and other charging systems. There continues to be a shocking mismatch between consumer electronics and highways ITS and tolling systems. What will it take to challenge this?
8. PPP toll roads in economies in recession have faltered and face sale and restructuring: Spain, Portugal, Greece and Ireland have faced serious challenges as toll roads in all those countries see demand collapse well below forecasts projected by concessionaires. A similar trend can be expected for some such roads in the US and elsewhere in Europe, the main culprit being grossly overoptimistic demand forecasts from demand modellers. This consolidation has only just begun in the sector, expect it to grow considerably.
In summary, road pricing continues to grow in interest. It is growing faster as a way of funding new roads, but it is the change in paying for existing roads that is more telling. The challenges remain political, not technological, but the key push has to be to get interest in ensuring motorists believe they can get a better deal from road pricing rather than fuel tax and annual licence fees. The only way that can happen, in my view, is by changing not only how vehicles are charged, but how the revenue collected is spent.
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