Israel tests reverse congestion pricing, but rejects actual congestion pricing

In 2013, Israel tested a form of reverse congestion pricing, which had parallels to the Spitsvrij and Spitscoren schemes trialled in the Netherlands.  According to CTech:

Back then, 400 out of 1,200 participants decreased their rush-hour travels by 16.4% on average, netting a few thousand shekels in the process. 

In essence it involve regular users of a road being paid money to reduce their road use, which in turn reduces congestion by incentivising them to drive less at peak times, choosing to change travel time, mode or frequency of travel.  The same report indicates that the new reverse congestion pricing pilot scheme will see participants granted a travel budget of ILS4500 (US$1276) which will be drawn down by peak time driving, but topped up by carpooling.  The idea being that at the end of the pilot, participants will be able to receive the remainder of their budget if they have saved it (with a cap of ILS2000).

It is being led by Ayalon Highways Company, a state road company, with assistance from two suppliers (Pointer Telocation and Pango Pay & Go).  The system will necessarily involve GNSS devices to identify where, when and how far participants drive.

Three stage pilot

The first step will see 500 participants recruited from the previous 2013 trial, mainly for a testing phase of three months.  This will be followed by a much wider recruitment effort, with another 4,500 participants to be recruited from the general public.

If successful, the report indicated that it may see up to 100,000 recruited, in 5,000 participant groups every few months.  If this is the case, it will be quite some budget for that many participants.  Think of 100,000 x ILS4500 = ILS450m (US$128m) to pay people to not drive.  

Actual congestion pricing

Paying people to not drive proves the effectiveness of financial incentives to change behaviour, but it is expensive and can raise questions about how fair it is for taxpayers' money to be spent on the most frequent drivers NOT driving (when those who don't drive at peak times at all wont get rewarded for not congesting traffic).

Real congestion pricing is more sustainable and likely to be just as effective, but Times of Israel reported that a cordon charge had implicitly been considered for Tel Aviv but with no details, noting that the toll lane instituted on Highway 1 had made little difference.

Israeli business publication Globes reported the view of the Minister of Transport Bezalel Smotrich:

There is no reason to impose a congestion fee at this time, because a congestion fee penalizes the public in order to persuade people to travel on public transportation - but people have no alternative. You don't levy fines when people have no alternative. The time is not ripe to impose a congestion feel on the public, despite the temptation to do it in order to reduce the budget deficit.

Unfortunately, the oft-repeated view that congestion pricing needs public transport as an alternative for all users continues to be spread.  There are other alternatives, as a well designed congestion pricing scheme would encourage changing the time of trips, and also note that at peak times some trips should be discouraged (e.g. social, recreational), with the alternative being to not travel or travel at another time.  Furthermore, congestion pricing could help offset other taxes or charges on motorists as well.

Hopefully the expansion of reverse congestion pricing might generate further innovative thinking to help encourage some application of actual congestion pricing in Israel.

Washington State Road Usage Charge Pilot Program - documentary

The US State of Washington recently concluded a pilot of light vehicle distance based road usage charging, testing an option to replace fuel tax.

Public television broadcaster TVW recently broadcast a documentary on the Washington Road Usage Charge Pilot Project which I have linked to below.  It includes:

• Comments from two pilot participants; and an
• Extensive interview with Reema Griffith, Executive Director, Washington State Transportation Commission.

It's around 24 minutes long, and is worth watching as it addresses issues such as comparing charges between the gas tax and paying by distance, privacy protection and use of data, as well as policy options going forward.  A full transcript is also available on the website for the documentary.

(Disclaimer: D'Artagnan Consulting advises and has been delivery partner for the Washington State Transport Commission on the Washington Road Usage Charge Pilot Project)

Grattan Institute is wrong about replacing fuel duty - the problem isn't just electric vehicles

I wrote before about a good report from the Grattan Institute, in Australia, promoting the idea of congestion pricing.

The report diverts into considering the case for replacing fuel duty in Australia with road user charging on page 32. 

It claims the case is flimsy for three reasons:

1. Fuel excise revenue is not plummeting, but just isn't growing as a proportion of GDP (this is true).  Drops in revenue in real terms in recent years are because of a freeze on indexing over twelve years, which is a separate matter (but does suggest the politics of raising fuel duty are not that simple).  
2. It doesn't matter if fuel excise duty plummets because it is not hypothecated for spending on roads and consists of only 5% of Commonwealth tax revenue, and the Commonwealth only pays on average 21% of spending on roads.
3. Australia has few electric vehicles (0.2% of the fleet) and is only going to be around 4% by 2030.

Now all three points have some validity on the face of it.  Yes, inflation indexation will largely protect revenue from fuel duty for some years.  Yes, the fact fuel duty isn't hypothecated means that road spending isn't dependent on it, and the proportion of electric vehicles is very low.

Yet, this fails to note three other points.

Electric vehicles are only part of the picture. Hybrid vehicles consume on average half as much as standard petrol or diesel engines per km travelled, and sales of hybrid vehicles are around eight times higher than pure electrics, and this figure is only likely to grow.  Furthermore, the trend of fuel efficiency with petrol and diesel engines continues as well, which means that new vehicles, regardless of motive power, use less fuel and so reduce the yield per kilometre travelled from fuel duty.  So while inflation indexing may retaining the value of fuel duty per litre sold, there will be fewer litres of fuel sold per vehicle.  This trend is seen in countries with higher sales of such vehicles such as New Zealand and the United States.  Even if Australia only has 4% of the fleet as pure electric by 2030, it might be more like 40% hybrid, with the remaining vehicles mostly much more fuel efficient than the current fleet. 

Equity is a growing issue.  Even if revenue could be protected solely by indexation of fuel duty to inflation, or increases beyond inflation (and some who advocate for electric vehicles would believe this would increase takeup of such vehicles), it raises a more profound question of equity.  Those acquiring electric or hybrid vehicles in most cases are buying new vehicles, so those who pay the least fuel duty (or none at all), are those who can afford a new vehicle.  Millions of Australians never buy a brand new car, let alone an electric or hybrid vehicle, so the collection of fuel duty over time will fall more and more on those least able to buy new vehicles.  Policy makers may be fine with this, but only if fuel duty is seen to be a tax on emissions, but it is a tax that the wealthiest are best able to avoid by spending A$124,000 on a Tesla  or A$50,000 on a Nissan Leaf.  If fuel duty is to be seen as a charge for using the roads, and contributing to paying for the costs of maintaining and upgrading the road network, then it becomes a much bigger issue, as it is unfair for some to pay and others not.

More closely linking what road users pay to what is spent on the network is a good policy objective. This goal has previously been mentioned in respect to reform of charges of heavy vehicles, and from an economic efficiency point of view, moving roads closer to a utility model whereby (beyond toll roads), road users pay various charges to use the network, based on the costs of maintaining and developing that network.  Hypothecating fuel duty for light vehicles (and heavy vehicles) would do this, and enable longer-term decision making to be made on road maintenance and renewals, allowing long term planning and better management of the costs of maintenance and construction over time.  Making fuel duty more transparent, so road users know what they pay and know it is spent on the network would make it much easier to evolve towards direct road user charging to replace it (and consider reducing the high registration fees in Australia, so that road use, rather than vehicle ownership, is more heavily charged). 

In the long term, road user charging can support congestion pricing.  Over time, if more and more vehicles are paying based on vehicle characteristics and distance, then charging by location and time of day could also be included.  However, it is not a reason to introduce road user charging for electric vehicles or hybrid vehicles in the next decade, nor should the interest in congestion pricing await such technology.

So I reiterate, Australia should investigate light vehicle charging, and along with Heavy Vehicle Road Reform, how reform of the funding, governance and rate setting of light vehicles can deliver a more accountable, transparent and better value for money system of road management for Australia.   It would be timely to reopen consideration of light vehicle charging once the proposed Large Scale On-Road Trial of Heavy Vehicle Charging is launched in 2020. 

Fuel duty will need to be replaced in Australia because it will be grossly unfair for the wealthiest Australians to pay a fraction of the cost to use the roads than those who can't afford vehicles with newer forms of motive power.  The research on future scenarios and options to address them should start, and within a few years all new electric vehicles registered in Australia, at least, should be required to pay a road user charge, and for work to be started to transition hybrid vehicles onto such a road user charge in due course.

Australia needs to charge electric vehicles for road use

Until around a year ago, the Australian Federal Government was investigating the merits of introducing some form of distance based road user charging for light vehicles.  The primary focus being on the expected revenue sustainability and equity issues as the light vehicle fleet transitions towards hybrid and pure-electric vehicles over the next couple of decades (the question of charging heavy vehicles is dealt with quite separately in Australia, and is subject to its own reform programme known as Heavy Vehicle Road Reform, and currently includes a small scale trial of heavy vehicle road user charging).  

It had come from the visionary Minister for Urban Infrastructure at the time, Paul Fletcher, who had announced in November 2017 that there would be a study into light vehicle road user charging.  The revenue sustainability issue has barely registered yet in real terms, not least because fuel duty in Australia is not hypothecated at all, so could arguably be said to be just an incidental tax on using the roads paid for by light vehicles.  The study was presumably cancelled because of political concerns, particularly because at the time, political polling indicated that the then Liberal/National Government led by Scott Morrison would be unlikely to win the Federal Election which was held in May 2019.

What happened was that Scott Morrison DID win that election, with a slightly increased majority, but nothing has been said about road user charging since then, except in the heavy vehicle sphere.  Yet there have been increasing calls from various parties to do something about it, not least because it is easier to study, test and implement road user charging for electric vehicles when they form such a tiny proportion of the vehicle fleet.   

Let's be clear, in 2018 only 0.3% of new vehicle sales in Australia were pure electric, although more recently around 2.3% are hybrids.  So it is a very small issue in fiscal terms, but the growth is considerable.  In the first six months of 2019, new electric vehicle sales are double that of the same time in 2018, and hybrid sales are up 84%, with a 10% decline in new petrol vehicle sales (and 9% on diesel), indicating a growing share of the overall market. 

With so few vehicles affected, you might wonder about the politics of acting, and the simple point is that it is never likely to be easier.  It might not be the issue around revenue that is important now.  The Grattan Institute dismissed the issue of replacing fuel tax in its recent report on congestion pricing, but the issue really shouldn't be about revenue first, but rather equity.  Why should someone who spends over A$100,000 on a new Tesla get to use the roads, essentially for free?

Furthermore, what I witnessed on TV last night indicated that it might be easier than many politicians think.

I happened to glance a TV polemical talk show in Australia last night, Paul Murray Live on Sky News Australia.  It is widely recognised as a rightwing, conservative (although more libertarian than traditional conservative) show, with a host that might be said to reflect some of the views of the Liberal Party base.  For Americans, it is closest thing Australia gets to Fox News.  The strong narrative is sceptical about new taxes, growth in government and a strong belief in personal freedom.

At around one hour and fourteen minutes into the show (excluding commercials), the host reported that The Australian newspaper published a poll result in which 76% of Australians believe that electric car users should pay to use the roads, and that around half believe it is unfair that they don't pay fuel excise.  The show continued with the conclusion from the host and the two panellists (one being Liberal Party Vice President Teena McQueen and other being former Labor candidate Sam Crosby that there should be action taken to develop means to charge electric vehicles for using the roads, and the sooner the better.

From 1:14:12 through till 1:16:55 in this audio recording for the show

This is notable, not least because what is often referred to as "Sky News at night" is usually filled with commentators which are very much to the right of the Australian political spectrum, unashamedly, and to the right of the Government.  Now the audience for the show is not large, but it is likely to be around 50,000 viewers, mostly of whom might be considered the Liberal/National Party "base" and those further to the right.

So what COULD be done?

For a start, the Government could start the conversation about the issues and the possible solutions.  The number one issue should not be revenue sustainability, as this falls out of the issue rather naturally and is less convincing in a country without hypothecation of fuel tax revenue.    Rather, the issue should be equity.  The graphic below from The Australian outlines roughly the issue, which is that owners of older larger cars pay a lot more to use the roads than hybrid or electric vehicles, and the question of how fair this is?

The counter-argument is that electric vehicles are "good" because of their environmental impact, which would hold some sway if the purpose of fuel excise was as an environmental tax on emissions, but that isn't the stated purpose.  If fuel tax is to be seen as a way of recovering road infrastructure costs from light vehicles (which part of it is for heavy vehicles), then it becomes a more compelling narrative around fairness.  Electric cars need well maintained roads and contribute to demand for safer and higher capacity roads as much as other vehicles, so it isn't clear why they should be exempt from paying.

The second point is to discuss the possible solutions, which really come down to two options:

1.  Significantly higher registration fees

2.  Distance based road user charges.

Higher registration fees are more likely to deter purchase and ownership of electric cars, but also wont reflect their use of the network.  It will encourage electric car owners to drive more after paying a high fixed cost, rather than consider the costs of each trip.

Distance based road user charges are exactly what is currently piloted in Oregon, Washington and Hawaii, and has been piloted in California and Colorado, and will be implemented in Utah.  

The graphic below Washington Road Usage Charge Pilot Project outlines the options to measure distance used in that pilot:

Washington RUC pilot distance measurement options

Australia could test these options and possibly others.

What Australia needs is to study the outcomes of the extensive overseas research on this, and New Zealand's own long standing Road User Charging system (which will be able to charge electric light vehicles in due course), then look to pilot multiple options for electric vehicle owners.  It will also need to consider how to treat hybrid vehicles, since they continue to pay fuel duty, so would need to have that refunded or pay a road user charge that is lower than that for electric vehicles.

It is likely that if confined to electric, hydrogen fuel cell and hybrid vehicles, that a study into charging light vehicles beyond fuel tax (and the relatively high price of registration) ought to be able to obtain some bipartisan support, as it has done in the United States.  

Congestion pricing in Australia should be a no-brainer

Centrist Australian think-tank, the Grattan Institute, has released a report advocating congestion charging for Australian cities.  The report is a good summary of the fundamental problem of traffic congestion and the strategies adopted by Australian cities and states in addressing it.

None of this will be news to readers of this blog.  The key point being that it is almost impossible to sustainably address traffic congestion in major cities by simply building capacity (paid for largely by those not using that capacity) to meet demand, whether it be capacity on roads or on public transport (which is commonly seen as the main way to attract traffic off of roads).   It cites the avoidable costs of congestion from a BITRE study of (Bureau of Infrastructure, Transport and Regional

Economics) of A$6.1 billion in Sydney and A$4.6 billion in Melbourne.  This is a figure imputed from the costs of lost travel time (and vehicle operating costs), but is still an economic drain.  There is no plausible way of significantly reducing these costs without pricing to spread and moderate demand.

I think the report provides a quite compelling case for congestion pricing in Sydney and Melbourne.  It particularly includes research and data that is pertinent to other "new world cities", characterised by largely low density population and land use, high private car ownership and usage and dispersed employment locations.  Many assumptions that may be widely held among decision makers and the public should be challenged by this report.

Some of the highlights are the following:

• In the morning peak up to 21 per cent of trips on Sydney roads are for socialising, recreation, or shopping (i.e. not commuting, or trips to education) (p.8).  This infers that the scope to price some of those trips onto other modes or at other times should be significant, and more importantly, even a drop of a quarter of those trips would likely have a noticeable effect in reducing congestion).  (The figure for Melbourne is 11%).  It also might infer that the elasticity of demand for those trips in the morning peak is greater than for others, but this ought to be established by further research;
• There is record spending on urban road and public transport infrastructure in major cities (over A$35 billion in the current year), indicating that it isn't a lack of spending on supply that is the issue (p.12), and the majority of committed spending is on public transport (p.8).  Quite simply, building more capacity will never be enough (and the value of that spending continues to drop);
• ANPR technology is now the most feasible option to use for cordon and corridor charging (p.13), as toll tags are increasingly unnecessary;
• There is insufficient use of "repurposing road space", which can be used to increase overall capacity or provide dedicated capacity to specific road users.  On average, 14% of road space can be reallocated (typically to cycling and pedestrians) without reducing overall capacity (p.22);
• Parking levies have very limited impact (A$2490 for Sydney CBD, A$1440 for Melbourne), noting that up to 40% of vehicles in the Sydney CBD are through traffic (compared to a third in Melbourne). (p.25);
• CBD cordons in Sydney/Melbourne could improve speeds by up to 16% in the CBDs and 20% on roads approaching them, and 1% improvement in whole of network speeds (pp.28-29), with more details to come in a report next week;
• CBD cordons would mostly affect high income drivers, as it is them who predominantly drive to the CBDs.  Only 15% of jobs in Sydney and Melbourne are in the CBD (pp.35-36);
• People on higher incomes tend to drive the furthest to work, 30% of workers live in the suburb they work in, or an adjacent one (p.36). Which may also indicate that charging by distance will mostly affect those on higher incomes;
• Low income drivers with few alternatives can be protected from excessive impacts of congestion charging (p.40).
• The report claims "now is the time" because others are doing it, but this shouldn't be the only determinant.  Of the proposals listed, Hong Kong is on hold for fairly obvious reasons, Vancouver's proposals received a very poor public response and are unlikely to proceed, Jakarta's proposals have been fraught with a range of difficulties (which I have written about on this blog).  I doubt in the short term whether any US city, other than New York, will advance further given the politics and lack of creative policy thinking (p.10).

The report rightfully (and in contrast to some other reports lately) notes there are broadly three main options for charging:

1.   Cordons (this should include area charging), although it only talks about CBD (central city) cordons, when this tool could be applied more widely onto other centres of activity.  London (as an area charge), Stockholm, Gothenburg, Milan, Valetta and the future New York and Abu Dhabi schemes are all cordons, and Singapore has one as part of its scheme;

2.   Corridor charges, although again this could be wider than a major highway and could include charges on viable alternative routes. Singapore and Dubai both have corridor charges; and

3.  Network charges, which it defines only as distance based charging, but actually needs to disaggregate by route and time of day (simply charging all travel at a flat rate by distance within an area wouldn't achieve much in comparison).  No city has this for congestion pricing to date, although Singapore will be implementing the technology that could facilitate this in the next year.

The reaction

Sadly I'm not surprised that the political reaction has been poor.  With the possible exception of former (Federal) Minister for Urban Infrastructure Paul Fletcher, there is at best a void of interest in congestion pricing in Australia and at worst antipathy which demonstrates fear most of all.

Of course, the experience of London is well known, and there was a flurry of interest in the UK in the five years after London implemented its congestion charge, but other schemes came to nought, for a range of reasons including lack of trust that charging elsewhere could deliver improvements for those paying that were worthwhile, and antipathy towards yet another increase in the cost of motoring. 

However, things have changed elsewhere.  The United States, where car use is dominant in all cities (except lower Manhattan), now has a flurry of interest in investigating congestion pricing. New York is proceeding, but the jury is out on other cities. Closer to Australia, work has continued on congestion pricing in Auckland (indeed Auckland has had multiple studies on congestion pricing specifically or considering pricing as part of a wider package for over 15 years).  The fact that new world cities are seriously considering it ought to mean the same should happen in Australia.

However in Australia the reaction from most circles is a big fat no, which is exactly what came from several sources in the days after the report was released.  Victorian Premier Daniel Andrews (who was re-elected in 2018 with an increased majority), who has a strong reputation for action on climate change said (according to the ABC):

The best way to ease congestion is to build a public transport network system which can deliver more trains, more often — and we're getting it done....We have no plans and do not support a congestion tax.

New South Wales Premier Gladys Berejiklian (who was re-elected earlier this year) said pretty much the same (according to 7News):

The best way to reduce congestion into the future is to build major public transport projects

The NSW Transport Minister echoed this. 

Unfortunately, they are all wrong.

London and Paris have public transport networks that would be the envy of any Australian city, but the simple rule is that large cities cannot build themselves out of congestion with public transport or roads, if pricing is not used as a tool to manage demand.

It is almost a cliché to say "building new roads just generates more demand", but this is in a climate of not applying efficient pricing to that capacity. 

But what about the toll roads?

Ah but Sydney and Melbourne have toll roads you say.  Yes they do, but only some major roads are tolled and almost none of them have higher prices at peak times (the Sydney Harbour crossings do, but the difference between peak and off peak prices are so small (A$1) as to have a correspondingly small impact).

Road Australia map of Sydney toll roads including those under construction

The negative for Sydney, Melbourne and Brisbane is that residents of those cities are highly likely to see congestion pricing as "just another toll", and media coverage of the issue reinforces this.  Because some toll roads are regularly congested, there is likely to be a high degree of scepticism that congestion pricing at modest levels would reduce congestion, when relatively high tolls do not appear to have that effect (but of course they DO have the effect of reducing demand on those roads, but as long as they remain priced the same all day long, there wont be any real difference in demand patterns compared to untolled roads, except parallel routes in very low traffic volume periods). Furthermore, as many toll roads are private concessions with concession agreements that limit policy options to constrain the revenue from tolls for the concessionaires, practically speaking it could be difficult to implement congestion pricing on a wide scale without having to compensate investors in those toll roads.

Melbourne toll roads in red

In other words, tolling is a negative when it is unpopular and linked to a choice of using a new road which is tolled compared to an existing road.  Yes tolls in Sydney and Melbourne contribute to moderating demand, but that effect is not apparent because most toll roads have the same price all day long.

What should happen?

States should investigate congestion pricing as a tool to reduce traffic congestion, sustainably manage demand on the road networks, encourage mode and time of day travel shift (very few commentators really note that part of congestion pricing is changing when people drive not just how people travel.

Congestion pricing is obviously thought of as a way of generating more revenue to spend on transport, but it could also be used to replace or reduce existing charges. For example, registration fees could be cut state wide, benefiting those in regional and rural areas who have virtually no transport alternatives.  Private vehicle registration fees in Australian state are high compared to New Zealand and US states (e.g. Victoria charges up to A$834.80 a year). 

Furthermore, congestion pricing options should be developed based on making noticeable improvements to network performance NOT revenue raising, and the debate about recycling the revenue can proceed.

Be very clear, there will be severe traffic congestion in Sydney and Melbourne for many decades, no matter how much money politicians pour into roads and public transport.  It wont be significantly eased without the use of pricing.  It's about time that work was undertaken to investigate options, to engage with the public about such options, what they would mean in terms of winners and losers, and how congestion pricing could reduce the burden of registration fees for everyone (much better than the ludicrous NSW toll relief on registration fees).

What I predict is that Auckland will have congestion pricing by 2025, even on a small scale, but by then the debate wont have moved on in Australia at the political level, if the politicians themselves don't get investigations undertaken about congestion pricing.

National League of Cities report gets congestion pricing wrong

"The views contained in the opinion piece below are solely my own and should not in any way be attributed to my employer, D’Artagnan Consulting LLP"

As I said a few weeks ago, the United States has suddenly "discovered" congestion pricing over a decade after Europe and over two decades after Singapore, in part because it is actually going to happen in New York.  This is good news.

At last, there is policy debate about using pricing to address road congestion, rather than the debate about simply building more road capacity or building more capacity for alternatives. 

The not so good news is that some writing about the topic appears a bit rushed and this enthusiasm to produce research and analysis can sometimes mean that there are gaps and inaccuracies which come out. One of the latest efforts is a report published by the National League of Cities called "Making Space: Congestion Pricing in Cities" (PDF).  It's not as good as it could have been, and could have done with a bit more time and some research (e.g. simply going to sources on this blog) to better inform cities considering congestion pricing.

Let's be clear, I am very supportive of anyone seeking to learn more and to think more about, I fear that a rush to generate "knowledge" could actually hinder progress in pricing, because it may oversimplify concepts, or worse yet disseminate misinterpretations of experience and concepts that might encourage opposition to road pricing more generally.  For example, to talk of congestion pricing primarily in terms of generating new revenue can raise fear that it is just a new form of tax, rather than a tool that addressing a major urban transport policy problem, which can also generate revenue (which itself could be used to reduce other sources of revenue).

I've read the report end to end. Overall it has some useful points and is well structured, and I hope it generates interest in congestion pricing as a concept, but I don't think the report is necessarily as helpful as it could be for decision makers, policy advisors or advocates for better pricing of road use, because parts of it are just not correct, and some useful details are left out.  For example, the number one reason congestion pricing programmes across the world have not progressed (and quite a few have tried) is because of a lack of public and political acceptability.  Ignore this at your peril.

The main flaws of the report are that it:

• does not adequately define congestion pricing;

• does not describe all of the behavioural changes that congestion pricing can encourage;

• does not describe the technology used in ANY operating congestion pricing systems today (but depicts technology that is not used);

• misconstrues the purpose of the London scheme, doesn't note the significant limitations of the scheme today;

• incorrectly reports the use of revenue collected from the Singapore ALS and ERP schemes, and does not accurately describe how it works;

• takes a narrow view of equity in congestion pricing, essentially claiming that the sole mitigation is additional modal choice;

• concludes with a new (and tangential) point about electric and automated vehicles, giving the impression that the imperative to consider congestion pricing is about such vehicles, not congestion more generally.

Below is a thorough review of the report.

Detailed review of the report

Abu Dhabi congestion pricing coming in October

Following over a decade after Dubai introduced tolls on existing roads called Salek, Abu Dhabi is about to introduce a more refined scheme which is arguably a form of congestion pricing.  It is officially called the Toll Gate System, and there is a good reason why, it effectively charges for all traffic entering and exiting Abu Dhabi 24/7.  The National has images of the first toll gantries installed.  I've put together a quick map, clearly showing that the four charging points create a cordon around most of urban Abu Dhabi. Charging points will be at the four bridges entering Abu Dhabi, with the stated aim of reducing congestion by encouraging car pooling and use of public transport.

Four charging points for congestion pricing in Abu Dhabi

The scheme will start on 15th October.  The Abu Dhabi Department of Transport Twitter account has a video (in English) summarising it.

DoT ITC announced that the Abu Dhabi Toll Gate System will launch on October 15. It aims to reduce traffic & enhance efficiency by promoting trip planning, and encouraging use of public transportation & carpooling.#SmartStart #TollGates #AbuDhabi #SmartCity #Transportation pic.twitter.com/1NpnD6Aymn

— "DoT" دائرة النقل (@AbuDhabiDoT) August 1, 2019

Charge rates 

There is no variation by vehicle type

AED2 (~US$0.54) Between 0900-1700 and 1900-0700 Saturday to Thursday, all day Fridays and public holidays

AED4 (~US$1.09) 0700-0900 and 1700-1900 Saturday to Thursday

There will be a daily cap of AED16 (~US$4.36) with up to ten days to pay for vehicles unregistered with the scheme.  

Fines

After ten days, fines escalate by day with a AED100 (~US$27.22) fine for the first day, AED200 (~US$54.45) for the second day and then AED400 on the third day (~$108.90) with fines able to reach AED10000(~US$2722).  There will be a similar fine for a tampered number plate or vandalism of roadside equipment.

Payment

Payment is through an online account or a payment kiosk (which are to be located scattered across the emirate).  The online account has what is called an Integrated Electronic Payment Wallet which is required to have sufficient prepaid balance to cover any charges.  Failure to keep the balance positive (travelling and incurring a charge that places it into deficit) will result in a AED50 (~US$13.61) fine.

The charging technology is Automatic Number Plate Recognition (ANPR).

On 30 August all Abu Dhabi registered vehicles will automatically have accounts registered at no charge, which will then need to be set up.   The relevant press release states:

All Abu Dhabi registered vehicles on the official system registration launch, 30 August 2019, will have automatically registered accounts at no charge. Account holders will automatically receive an SMS message stating their user-name and password for that account, and can then add any additional vehicles to the registered account as required. For vehicles registered outside Abu Dhabi, the owner must be registered in the system before crossing the toll gates. In case a vehicle which is not registered in the toll gate system crosses under the toll gates, the user will be given a grace period of ten business days, starting from the crossing time, to register in the system, otherwise a fine applies.

Exemptions

Emergency vehicles (ambulance, civil defence, police), military, Ministry of Interior vehicles, public buses and school buses, and Abu Dhabi licensed taxis are all exempt, along with motorcycles. 

Electric vehicles get a two year exemption, to try to encourage greater use of such vehicles (it's worth noting that Abu Dhabi has phased out subsidies for petrol in recent years).

Verdict?

Abu Dhabi has learned from Dubai, because it isn't introducing a leaky corridor charge with options to get around it. ANPR technology has moved on a lot, so that the toll tags used in Dubai wont be needed for Abu Dhabi, saving money on road side technology and the costs of managing toll tag inventory.  It is obviously designed geographically to put a cordon around Abu Dhabi, notably with the airport excluded, so all trips by visitors in and out of Abu Dhabi by car (although not taxi) will be charged, whether they arrived by air, from other parts of the UAE or other countries.

The exemption list is understandable, although including Abu Dhabi licensed taxis will mean greater use of taxis as substitutes for private cars. I'd suggest three points for refinement:

1. Don't charge all of the offpeak.  Yes, Abu Dhabi's climate means there is a lot of activity very late at night, but having a charge free period would encourage more time of day shift for travel.  It is understandable to charge an hour or two either side of the peaks and during the day, but Abu Dhabi's roads are not congested 24/7.  It would be efficient to encourage traffic that has no modal substitution (e.g deliveries) to move to other times.
2. After the scheme is bedded in, consider more refined charging periods at the charging points.  Although only Sheikh Khalifa Bridge is sufficiently distant from the other three to justify different charging periods and rates (the other three bridges are adjacent), there may be sense in having shoulder periods to the peaks (AED3 one hour either side) and other moves to spread demand.
3. With more refined charging, consider charging trucks more than cars.  Trucks occupy two to three times the road space of cars, so contribute similarly to congestion.  Although there is less flexibility to change behaviour (as it is only about time of day or consolidating trips), it is still an efficient approach to pricing the use of scarce road space.

ACCC/AER Regulatory Conference presentation on road reform

Last Thursday I presented to the annual ACCC/AER Regulatory Conference in Brisbane, Australia.  The ACCC is the Australian Competition and Consumer Commission, which is Australia's anti-trust authority and consumer protection agency, the AER is the Australian Energy Regulator (which regulates the wholesale gas and electricity markets).  The presentation was about road reform, more specifically about whether roads could be transformed into regulated utilities, similar to energy and telecommunications networks.

The differences between roads and other networks are palpable, not least because roads are often funded directly by government, rather than from revenues collected from road users.  Even if road users pay taxes or fees related to road use (such as fuel tax), the relationship between what is charged and what is spent on the network is often weak.  Rarely are the road managers involved in setting the rates charged by those using the network they manage, nor is there much input from those who pay into what is spent on the network.

In some cases, road networks are managed by a very traditional government agency, which is primarily incentivised to lobby for more money, has budgets determined entirely by a political process, and is dominated by a culture of engineering and bureaucracy.  This is a vast contrast from utility networks, which are increasingly subject to competition, but more importantly bill their customers directly and decide themselves how to spend that money on maintaining, renewing and expanding network capacity.  Some use price to incentivise changes in demand, such as more off-peak utilisation.

In part this is historical, but it is also because roads are ubiquitous and such a dominant part of modern infrastructure.  Roads usually provide access to land, not just for motor vehicles, but for pedestrians and bicycles.  Roads range from having purely arterial to purely access functions, and some roads are not for motor vehicles at all.  They are also corridors for other utilities, such as pipelines and cables, and provide locations for street furniture ranging from postboxes to street lights to seating.  Yet none of that means that roads should just be treated as a public good that "everyone" pays for, not least because wear and tear is a function of the use of motor vehicles, particularly heavy vehicles.  Furthermore, there are often challenges around congestion, safety and route security and resilience due to external factors ranging from weather to earthquakes and flooding.  It isn't "everyone" generating demand for road capacity at peaks, or bridges that can withhold higher axle weights.  Roads are used by businesses to deliver goods, provide services and attract customers.

Road reform internationally

The result of a system that resembles that of other elements of government is that roads are often suffering from a lack of funding for basic maintenance let alone new capital spending, but also the political system tends to prioritise high profile, politically noticeable projects over mundane but essential maintenance.  The political system may be reluctant to increase charges on road users.  Rarely are politically rationed services seen as being exemplary in service to the public.  However, the big impacts of having an unreformed system are seen in systematic congestion (because prices mean demand exceeds supply), poor standards of maintenance in parts of the network and network gaps (such as mass restricted bridges) that hinder the efficiency of users.  Furthermore, the responses to these problems are often ad-hoc, or to focus on increasing the attractiveness or reducing the price to users of alternatives, rather than the problems of a network that isn't managed for users, paid for by users and priced to reflect cost.

So my presentation is here it runs through where others have embarked on major structural reform, with case studies of Austria, England (not the UK) and New Zealand.

In the context of road pricing, Austria's motorway network funds itself, through heavy vehicle charges based on distance and light vehicle charges based on buying access by a number of days.  England still has non-hypothecated charges on ownership and fuel, but will soon be hypothecating Vehicle Excise Duty (equivalent to registration fees elsewhere) to fund Highways England.  New Zealand has mass/distance road user charges for heavy vehicles and light diesel vehicles, fuel tax for petrol and LPG powered vehicles only and registration fees, all of which are hypothecated to fully fund state highways and on average, half fund local roads (and public transport subsidies).

Will Jakarta get congestion pricing?

The Jakarta Globe claimed that Electronic Road Pricing (ERP) will be operational on some roads in Jakarta by March 2019, but clearly this hasn't happened. What has gone wrong?

I've written a lot about Jakarta's attempts to introduce congestion pricing in recent years.  In order from 2010 to 2016:

-Is Jakarta about to introduce congestion charging?

-Jakarta to be first of five Indonesian cities to introduce congestion pricing

-Jakarta congestion pricing - what might it look like?

-Jakarta moving forward with congestion pricing

-Jakarta proceeding with congestion charging system UPDATE: May go for a simpler approach

-Jakarta finally proceeding with urban congestion charging

-Jakarta ERP (congestion charging) update: GPS under consideration

-Jakarta congestion pricing facing problems by charging only main roads

-Jakarta's congestion pricing programme is further delayed

Coconut Jakarta said Inrix's most recent report indicated Jakarta has the world's 12th worst traffic.

Jakarta Deputy Governor Sandiaga Uno now says it will be implemented after the Mass Rapid Transit (MRT - metro) line along Jalan Jenderal Sudirman to Jalan Medan Merdeka Barat is opened.  Coconut Jakarta also reports that Greater Jakarta Area Transportation Management Agency (BPTJ) head Bambang Prihartono has suggested charging for non-Jakarta registered vehicles to enter the city.  That may have some obvious appeal, although it would encourage commercial vehicles to register in Jakarta to avoid this (and provide a possible path for avoidance of private individuals registering vehicles through Jakarta based companies).  However, he is right to talk of ERP as the long term solution, that would enable mode shift to public transport if it is expanded sufficiently.

Where now?

Singapore's Straits Times says that 50% of vehicles in Jakarta come from outside the city, and that the first phase of the ERP scheme will be to charge for use on one road between two roundabouts - Jalan Jenderal Sudirman.  Phase Two would be an extension north along Jalan MH Thamrin.  Jalan Jenderal Sudirman already has bus rapid transit lane along much its length, and the MRT line is also under construction following that route.

Phase One (blue) Phase Two (orange) of Jakarta ERP (2018)

The choice of this route appears to be because it will parallel public transport options, as well as being a particularly congested corridor.  Care may need to be taken to ensure charging points minimise opportunities for diversion, otherwise nearby routes.    

However

The last report on the plan was to await installation of congestion pricing until Jakarta's metro system opens. The first phase opened on 24 March 2019 (the Red Line), but there are wider problems with implementing congestion pricing in Jakarta.

Jakarta's MRT (metro)

The main issue is that the tendering process for the system has been undermined by two of the three shortlisted bidders withdrawing (namely QFree and Kapsch, both well known for their experience in installing tolling systems) leaving only the Indonesian firm PT Bali Towerindo Sentra remaining.  One can only speculate about their reasons for withdrawing, but in doing so there is clearly insufficient confidence from the authorities to proceed.

The Governor of Jakarta has since indicated that it is "more important" to upgrade public transport than to introduce ERP, yet it is fairly obvious that the latter could help the former.  Even just introducing the single ERP corridor charge would make it much easier to introduce more rapid and frequent bus services on that corridor, and raise revenue to to improve transport infrastructure more widely.  The public transport goal is to get 90% of residents able to access either the metro (MRT) or bus rapid transit, with the current position being around 20%, but they could be introduced hand in hand.

There is another issue which is not getting much publicity, but is more fundamental to the success or failure of congestion pricing - the quality and reliability of automatic number plate detection to enforce ERP.

False number plates, and poor data linking vehicles to owners' addresses is a problem in Indonesia, which would make enforcement of ERP in Jakarta difficult.  This is a responsibility of the Police, who understandably are less enthused about addressing a problem which is more about traffic management than crime.

If the fundamental problem of fake number plates and an unreliable database are not addressed, then congestion pricing can't be implemented.  Simple as that.  As I've said before, if Jakarta can't implement free flow tolls on its existing tolled road network, it is not going to reliably introduce congestion pricing. 

No doubt reforming and upgrading both the number plate system, the enforcement of number plates and the database and processes for changing data on vehicle number plates is not easy in Jakarta, but it is going to be key to moving forward.  Whilst Jakarta embarks on upgrading its public transport network, it should move ahead on reforming this, use it to replace manual tolls on existing toll roads (which in itself will ease congestion on and approaching those roads), giving it a modern vehicle management infrastructure to introduce ERP.

Australia's National Heavy Vehicle Charging Pilot : Small-scale on-road trial of heavy vehicle charging is launched

Last Thursday (25 July 2019), Australia's Deputy Prime Minister and Minister for Transport, Infrastructure and Regional Development, The Hon. Michael McCormack along with The Hon Scott Buchholz MP, Assistant Minister for Road Safety and Freight Transport formally launched Australia's first nationwide on-road trial of heavy vehicle road user charging.

The press release is here, with more details on the Department of Infrastructure, Transport, Cities and Regional Development ("the Department") website here.

In short, it involves:

• Up to eleven heavy vehicle operators (truck and bus) using on-board telematics systems that they were already using in their vehicles (commercial telematic systems used for fleet management purposes);
• Up to 111 vehicles will be included (so an average of a maximum of ten vehicles per fleet);
• A trial of six months duration;
• Operators to use existing systems to report vehicle configuration;
• Each operator will receive mock invoices generated by measurement of road use using the telematics systems on each participating vehicle, which will enable comparison of hypothetical charges with current charges

The trial will assess the experience of heavy vehicle users in receiving mock invoices to compare what they might pay under distance/mass/configuration based charging compared to the current mix of annual registration fees and fuel tax.  The idea being that charging by distance could replace such charges.  The diagram below from the Department indicates its plan to follow the small-scale trial with a large-scale trial next year on a much bigger scale and complexity. 

Australia's heavy vehicle charging trial programme

The small scale trial will use only one technology - existing telematics systems (which by necessity are all GNSS based On-Board Units (OBUs). The large scale trial could also include manual options to report distance, and an option to report actual mass.  However, further details of the large scale trial will be developed in the coming months, and is likely to be informed by the progress and evaluation of the small scale trial, and engagement with stakeholders (including heavy vehicle user representative organisations).

The operators participating in the small-scale trial are:

• Bridgestone Australia Ltd  
• Buslines Group Pty Ltd 
• Conroy Removals Pty Ltd 
• Coolibah Quarries 
• De Bruyn's Transport 
• John West Logistics Pty Ltd 
• J R Bulk Liquid Transport (Blu Logistics) 
• Nuline Charter Pty Ltd
• Simon National Carriers 
• D & S Smith Haulage Pty Ltd
• Toll Group 

This is quite a range including local and national operators, with operators based in several states.  Telematics providers supporting the trial (providing the systems used by those operators) are:

• EROAD (well known for providing heavy vehicle RUC services in New Zealand and Oregon)
• Volvo Buses (telematics)
• Volvo Trucks (telematics)

The trials are part of a wider programme of reform of the provision of roads for heavy vehicles in Australia called Heavy Vehicle Road Reform.  The first phase of this is set out here, and involves improving transparency about spending, asset management and the levels of service provided to heavy vehicle road users. 

Other reforms as part of this include consideration of independent price regulation of the setting of heavy vehicle charges (including existing registration fees and the fuel-based charge), and measures to more closely link revenue collected from heavy vehicles to road managers for investment in their networks.

It is clear that it is early days and no decision has been made by the Australian Government to change how heavy vehicles are charged in Australia, and any decision to do so is likely to be some years away. 

It will be interesting to watch the small scale trial with interest, particularly what the responses of participants are and the lessons that the Department will learn from the trial to develop the larger scale trial and inform wider reforms. 

Disclosure:  D'Artagnan has been providing technical advice to the Department of Infrastructure, Transport, Cities and Regional Development on heavy vehicle charging trials.

Congestion pricing - the United States awakens

Singapore pioneered a basic form of urban congestion pricing in 1975, and introduced what is still the most sophisticated, economically rational and effective congestion pricing in the world in 1998, called ERP (Electronic Road Pricing).  In 2020 it is transitioning its operating technology to GNSS On Board Units (albeit to initially apply the same mix of corridor and cordon charging as applies today, but with the focus on delivering more information about pricing, traffic, parking and alternative modes through the system).

However, if you've been following the recent very public debates and commentaries about congestion pricing in the USA you'd be excused for thinking it is new and innovative.  Innovative it is, it is just that the US has come a bit late to the concept, but what is driving it is not so much congestion, but the desire to use congestion pricing to raise revenue - typically not for roads.

For many years congestion pricing in the USA has largely been referred to in the context of express/HOT/toll lanes. Although such lanes offer options to pay to bypass congestion on some highways, they are not "comprehensive" in addressing congestion and more importantly are not technically able to be implementing except on roads with limited access. In most cases they have been implemented by converting high occupancy vehicle lanes to HOT/toll lanes. It is rarely economic to build new lanes and charge just for them (because there is insufficient willingness to pay for the capital costs of new capacity, particularly when such capacity may only be utilised for short periods during weekdays), so HOT/toll lanes are rarely seen outside the USA.

The positive example of toll lanes is that they demonstrate that the instrument of price is effective in managing demand so that a road can operate in free flow conditions, but of course such lanes are not practical on most roads and they always have an unpriced alternative.  At best they offer an option in some cases, and demonstrate the concept.

So full congestion pricing has not been seen in the US to date. By that I don't mean having peak pricing on an existing toll road to spread demand on that road (this is seen on many crossings, such as the Golden Gate Bridge, E-407 Toronto and the Sydney Harbour Crossings), but rather pricing of a network or placing a cordon (either on its own or as an area charge) on a zone, with priced access at set times/days.

This isn't common as all. Although there are many low emission zones in European cities (which prohibit or heavily charge vehicles that don't meet low or ultra-low emission standards) and restricted access zones to cities (this is seen in many Italian cities, keen to preserve historic centres of cities ill suited to large volumes of vehicle traffic), the only cities that charge a network or a zone for access on a significant scale are:

- Singapore

- London

- Stockholm

- Gothenburg

- Milan

- Dubai

- Tehran.

There are a handful of smaller examples, Oslo transitioned from a cordon set up for revenue raising to one that has a congestion management purpose now, but by and large congestion pricing is hard to implement.  It's been investigated in multiple cities in the UK (Bristol, Cambridge, Leeds, Manchester, Edinburgh) and elsewhere in Europe (Dublin, Amsterdam, Copenhagen, Helsinki), but has always come up against one major issue - public opposition.


What has woken up the US?

How about the US then? Suddenly cities, states and the media have discovered congestion pricing because of one simple reason - New York is going to do it. This follows previous attempts to introduce it, most notably by former Mayor Michael Bloomberg, who had his proposal for a cordon on lower Manhattan vetoed by the State Legislature.

The New York Senate and Assembly have approved it, along with the State Governor. The details are to be worked out by a new Traffic Mobility Review Board, but it is essentially a cordon that starts at 60th St, excluding FDR Drive and the West Side Highway. All of the net revenue is to spent on the public transport network, specifically the subway, bus network, the Long Island RailRoad and Metro-North. Private cars are only to be charged once a day, whereas ridehailing/sharing and taxi services are already subject to a surcharge of between US$0.75-US$2.75 per trip, depending on the service since 2 February 2019.  Although Charles Komanoff indicates that the effects will be much less than promised (still a 2.5% increase in average traffic speeds is worthwhile).

Some of the details to be worked out include:

· Charge rates (will they vary by vehicle type)

· Area charge (will vehicles be charged for circulating within the cordon as well as or separately from crossing the cordon)

· Direction of charge (will there be a charge for entering AND exiting the cordon)

· Time of operation

· Variation of charge by time of day

· Discounts and exemptions (it might be fair to assume that emergency vehicles and NYC transit vehicles might be exempt, but will the ride hail/share surcharge liable vehicles be exempt too)

· How those entering lower Manhattan on tolled crossings will be treated

New York is basically implementing a simple charge, primarily to raise revenue for other modes, so it will be interesting to see what impact it has and whether it is designed to spread demand by time of day, as much as it is to raise revenue. It will clearly be a trailblazer, although it is unlikely that other US city has either the density of public transport or geography to lend itself to a relatively simple cordon as the solution.

What about the rest of the US?

San Francisco has studied charging before, and looks like pursuing it again. The San Francisco County Transportation Board Authority voted earlier this year to spend US$0.5m on a study of downtown congestion pricing, suggesting that it has already decided that a downtown cordon is worth pursuing. It will be interesting to see what impacts that might have, and particularly how boundary issues are addressed. The San Francisco Mobility Trends report indicated that "vehicular traffic entering San Francisco grew 27% since 2010, although public transport use also rose 5% and cycling by 6%, on a 9% population increase (indicating that the growth in population is pushing a big increase in driving), with a decrease in private car travel speeds by 23%. It's hardly surprising that pricing access to downtown is a priority, although hopefully it will mean pricing that varies by time of day.

Los Angeles has already had a study released by Southern California Association of Governments (SCAG) which proposed a pilot cordon at Westside LA, for a number of reasons (see page 94 of the below report).

Proposed Westside LA cordon from SCAG study

 The Mobility Go Zone and Pricing Feasibility Study indicated that it could result in a 19% drop in private cars entering charged zones, and a 9% mode shift to public transit, with 7% each to walking and cycling. Whilst this might be a good place to start, LA is going to need a much more comprehensive solution to address congestion across the region. LA Metro is about to launch a study that looks more widely at options, with the intention that pricing would support a package of improvements to public transport and active modes.

Boston, Portland, Seattle and Washington DC are all considering congestion pricing, which has to be welcome. The US has gone through a couple of eras in urban transport policy, from the 1940s to the 1970s the focus was almost entirely on building roads to meet demand. That has tailed off, with a focus from the 1970s of building (mostly rail-based) public transport infrastructure to try to attract motorists from their cars, in other words supplying alternatives. More recently, cycling has had a boost in some cities, but the primary argument in all cities is one of what to supply, rather than how to manage existing demand and supply.