Talk of Beijing congestion charging creates opposition

Typically, narratives around government policies in China are dominated by the false belief that if a Chinese Government body says something is going to happen, then nothing can be done about it.  The truth is much more subtle, and besides indicating - in this case - that congestion charging needs to be considered carefully if it is to get public support - it also indicates that China has moved from the stereotype of the Maoist single-minded unity, to one where there is public discourse about policy.

The (Hong Kong based and owned) South China Morning Post reports on a delegate from the Beijing Municipal Commission of Transport saying that congestion charging was being considered for city.  However, the public response on weibo (Chinese equivalent of Twitter) was mostly negative. 

The report says:

Opinions posted on weibo accounts were almost one-sidedly negative, with some accusing the government of being "lazy", "brutal" and "greedy".

Nie Sheng, a resident of Daxing who drives to work in Haidian, said a congestion charge would not solve Beijing's traffic jams, judging by past experience.

"In recent years, the government has restricted sales of cars, raised parking fees in the city centre and banned non-local vehicles from the city, but the traffic has only got worse," he said.

Nie also worried that the charge would penalise low income and middle class drivers while sparing the rich and powerful, who could either afford the charge or used government cars.

It shows that if a charge is to be introduced, it needs to be part of a strategy that complements it, not just a tax.  One comment from a government body expresses concern that a congestion charge could affect retail sales, but professor of urban traffic management at Beijing Jiaotong Univeristy, Chen Xumei says one reason why so many use cars is the attitude to public transport:

Most people drive because they feel no dignity on public transport, which is inconvenient, congested, uncomfortable and dirty," she said. "The money collected from the congestion charge should be used to improve public transport"

Indeed, a package to make public transport more user friendly and able to meet a wider range of demand would also make a difference. 

Talk again of congestion charging in Beijing

Anyone who visits Beijing can't help but notice the intensity of the levels of traffic in the city, which parallel the toxic atmosphere that blankets it as well.  Whilst it is unfair to blame Beijing's air primarily on road transport (Beijing did have many heavy industrial plants located there as part of a Maoist policy of glorifying such industry), it is clear that the excess demand for the available road space is not only strangling the city economically, but also contributing to its suffocation by pollution.

I've written before about the challenges in implementing congestion pricing in Beijing:

- Does Beijing need congestion pricing?

- What should a Beijing congestion charge system look like?

My view is that it can be done, but is probably best implemented on a zonal basis at this stage, with the key issue being able to enforce against number plates in a consistent, fair and well managed way. 

China Radio International reports that "The Beijing Municipal Environmental Protection Bureau has announced that it will draw up policies related to a congestion charge in a newly issued document."

News Briefs - China, India, UK, USA

China - Poll rejects congestion pricing

China Daily reports that an online poll (yes I know) by China Youth Daily saw around 75% of respondents oppose congestion charging for Beijing, preferring to support "improving the city's planning process, the road repairing projects, and the traffic management mechanism" to reduce congestion.  Good luck with that then.

Hong Kong - Hopewell retains BBB- Fitch rating

Reuters reported in October 2012 that Hong Kong based toll road investor, Hopewell, retained its credit rating with Fitch.  Hopewell Holdings owns 68% of Hopewell Highway Infrastructure Limited, and Fitch reported:

Hopewell Highway Infrastructure Limited (HHI), continued its stable performance in the financial year ended June 2012 with a 5% increase in revenue. An overall increase in traffic volume is driven by continued economic growth in the Guangdong province, and improving connections to local road networks and strategic locations. In particular, the West Route enjoys synergies from completion of Phase II, and average daily traffic grew by 39% in FY12.

A new tariff framework effective from June 2012, as well as the "Holiday Toll Free Policy" effective from October 2012 will adversely affect cash flow generation capacity of the toll road portfolio. Fitch expects the toll road portfolio's EBITDA to decrease by around 15% as a result in FY13. 

Hopewell is in joint ventures with Chinese companies over five toll roads in the Pearl River Delta area of Guangdong province in China.

India - Toll tags may be mandatory

A report from the Deccan Herald quotes N R Gokarn, CEO, National Automotive Testing and R&D Infrastructure Project (NATRIP), a government led project, as saying that "RFID tags" that identify vehicles are likely to become compulsory across India.  This would help with identifying vehicles more generally, as well as facilitating a shift towards electronic free flow tolling.  The National Informatic Centre (NIC) contains data on over 90 million vehicles including owners and insurance details, and it is intended that any such system enable ready access to that database for tolling.

India - IRB acquires MVR

LiveMint reports that IRB Infrastructure Developers Ltd has acquired 74% of MVR Infrastructure and Tollways Ltd.

IRB's corporate profile states:

The company, along with its subsidiaries has constructed or , operated and maintained around 8,000 lane kms of road length so far and one of the major road developers in the country. The aggregate size of all our BOT projects (both completed and under execution) is around Rs. 170,552 Million (US$3.1 billion).

MVR Infrastructure and Tollways is a construction and toll road management company based in Tamil Nadu.

UK - Manchester still not interested in congestion charging

A rather odd little news report from the Manchester Evening News notes that a survey recently conducted by the AA indicates 80% of those polled oppose congestion charging for Manchester.  A referendum in 2008 saw a 79% "no" vote for a proposed congestion charging scheme that was to raise money to pay for major public transport improvements.

This is hardly surprising.  People wont vote for what they see as a new tax, especially since central government decided to give Manchester the money for some of the public transport improvements anyway, presumably as an election sweetener, and Manchester local authorities borrowed money to pay for the rest.  Meanwhile, Manchester was hit by the recession, and traffic volumes have not increased since 2008.  Any deal for congestion charging needs to offer something in terms of improvements to roads or reductions in other taxes to have any chance of being supported.

UK - Birmingham's transport authority wants private toll road nationalised

I've written about the M6 toll road before.  It was fully privately financed and built, and runs at a loss, without a penny contributed by taxpayers.   It is heavily under-utilised, in part because tolls are highly priced (but revenue maximising) and in part because the travel time savings are not high, except at peak times when the untolled parallel motorway is congested.

This upsets the planners at Centro - the West Midlands Transport Authority - which is responsible for transport planning in the wider metropolitan region surrounding Birmingham.  Centro has no authority over the motorways, but according to the Birmingham Post, Chief Executive, Geoff Inskip wants central government to buy the M6 toll road, reduce or eliminate the tolls, and so relieve the existing untolled road.  It even suggested tolling the existing untolled road at peak times, to help pay for the purchase.

Now I'm no fan of nationalisation, but tolling the existing route at peak times would provide some "competitive neutrality" between the routes.  One idea is that vehicles are charged to use both routes through fuel tax, but none of that fuel tax goes to the owners of the M6 toll road.  If a deal was done to reduce tolls by a proportion reflecting that contribution, it might make a small difference.

USA - New York - Citizens' Budget Commission recommends higher tolls

Capital New York reported in October that the lobby group "Citizens Budget Commission" proposed that 25% of funding of the New York public transit system should come from tolls:

The commission argues that not only should drivers' tolls cover the upkeep of bridges and tunnels, which they do now, but they should also underwrite a quarter of mass transit services, thanks to all of the "harmful consequences" that drivers cause but do not pay for, like "noise, congestion, air pollution and greenhouse gas emission."

To that end, the commission would raise tolls on M.T.A.-controlled bridges and tunnels to as much as $9 in cash. Right now, drivers pay $6.50. Once the 2013 and 2015 hikes go into effect, drivers will pay $7.50.

Further, the commission proposes raising vehicle registration fees, which are now amongst the lowest in the country, and the gasoline tax.

The CBC also says congestion pricing should also be considered, again.

It also proposes fare increases for public transit.   This doesn't mean tolls on untolled crossings, but raises the obvious question as to why not, as the inequities of only charging some crossings simply becomes exacerbated.

News Briefs - Australia, Brazil, China, India

Australia - Melbourne's car park congestion tax to stay despite low impacts

Public broadcaster ABC reports that the Victorian Government is likely to keep the tax on inner city car park spaces intended to reduce congestion, despite a study that claims it has had little effect on congestion.

Inner city parking taxes are often cited as low cost alternatives to implementing congestion pricing.  50,000 car park spaces in downtown Melbourne are subject to such a tax which is either A$650 (US$682) or A$910 (US$956) a year depending on the location.  The tax was introduced in 2006 and raises A$46 million (US$48 million) a year in revenue for the Victorian State Government.

A Monash University study indicated that part of the tax was being absorbed by car park operators and that there was minimal impact on congestion, it suggested that a better option would be a cordon based congestion charge, although motorist lobby group the RACV (Royal Automobile Club of Victoria) rejected that in a report in the Herald-Sun newspaper claiming motorists are already over taxed, preferring more money to be spent on transport projects.

Brazil - Expiring toll road concessions to be retendered

Nasdaq reports that according to the Estado de S Paulo newspaper, the Brazilian government has decided that when the first toll road concessions expire in 2015 it will re-tender them with the intention that rates of return should be lower.   It will also specify that tolls can only be charged after a certain proportion of improvements to highways have been undertaken by a concessionaire.

"To ensure that 5,700 kilometers of two-lane highways are expanded into four-lane highways by 2018, the government will stipulate that operators start charging tolls only after 10% of the lane-duplication process is already executed" ..."As part of a package to improve transportation infrastructure, the federal government plans to license 7,500 kilometers of highways to private operators for a 25-year period".

Concessionaires have expressed concern that environmental licencing imposes a cost on development that will slow down the period between when they start work on a project and can start charging tolls.

China - Beijing traffic plan includes concept of congestion pricing

Global Times reports that Beijing is to get congestion charging included in its latest traffic plan, although there are no details about what congestion pricing will look like for the city.  The article has comments from an academic who says Beijing also needs more rail and congestion is inevitable with fast growth, but also a local resident who uses public transport and supports the idea.  I wrote some time ago about potential options for congestion charging in Beijing.

India - Macquarie SBI buys into Indian concessionaire

According to NetIndian News Network, Australian/Indian joint venture Macquarie SBI Investment Fund (MSIF) (comprising Macquarie Capital Group and the State Bank of India) has announced it is investing US$150 million into Ashoka Concessions Ltd (ACL) of India, along with SBI Macquarie Infrastructure Trust.  It would appear likely that the reason for the MSIF (and SBI Macquarie Infrastructure Trust) is that Macquarie Capital is restricted from investing in its own right in Indian infrastructure because of foreign ownership limit laws (and the State Bank of India is keen to use foreign capital and expertise).

ACL is a 100% subsidiary of Ashoka Buildcon Ltd (ABL), an Indian engineering and construction firm.  ACL reportedly owns 7 concession toll roads comprising 3,018 lane km (630 length km). ABL itself has a portfolio of 12 Build Own Transfer (BOT) road projects in India (with 6 under construction) excluding its portfolio of footbridges.  Not all of these projects are tolled.

ACL's projects have a construction cost of US$1.5 billion.  78% of the traffic is commercial.  Average remaining concession period is 22.7 years.  This is MSIF's first road investment and will comprise 13% of MSIF's portfolio value.

Macquarie SBI published a presentation with more detail about the investment.

What should a Beijing congestion charge system look like? 了北京交通拥堵费应该是什么样子？

北京交通拥堵费

The BBC reported earlier this week that the Xinhua News Agency had reported that Beijing is looking to introduce congestion pricing. It offers few insights, but Beijing has been experiencing reductions in traffic recently due to increases in parking charges and fuel prices. It introduced a limit on new car registrations, but the effectiveness of this will be restricted to those who have no options to register addresses or ownership of cars outside the city.

The idea of congestion charging Beijing has received a lot of commentary, some ill-informed suggesting that CCTV cameras can do it (they can’t). Some suggesting it be London style (it wont be enough). The report itself indicated it might apply to a few roads, but Beijing would be wise to not just copy what is done elsewhere, or let engineers implement what is feasible. Rather it should analyse the congestion problem itself, map out where and when it happens, and design a system to address that. Given the exuberance of engineers to build and design solutions that fit what they think can be done, it is wiser for policy managers to take a deep breath and decide what they want to achieve, rather than what they are told they can do.

China Daily reports the goal is to increase public transport mode share for trips within the Fifth Ring Road to 50%, up from 40%, and to reduce travel time to 1 hour from outer suburbs to the fifth ring road.

Beijing with Fifth Ring Road highlighted

On the face of it, Beijing needs a charging system that is quite comprehensive. Simply charging individual routes will result in diversion, and simply charging one big zone will have only limited impact. What is needed is a scheme that will be easy to implement as of first, but which is readily scalable. Singapore has the closest model to this at the moment, but its technology is now obsolete for any new systems. My suggestion is that Beijing, indeed China, take a far bolder step.

Given the expected growth in road transport in the next few decades, China is in a perfect position to take advantage of Intelligent Transport Systems (ITS) to manage traffic and improve safety. A few years ago it was reported that China had the highest road fatality rate globally, on a per vehicle basis. While there are a lot of conventional measures that can be taken to address this, one should be to build an ITS platform for safety and tolling measures to be introduced across the country.

One option would be to adopt the US 5.9GHz platform as mandatory for all new vehicles (no doubt China may prefer to have its own and the EU has another standard), which would allow for the following safety related applications:

- Emergency vehicle warning system;

- Forward collision warning;

- Intersection collision warning and avoidance (road and rail crossing);

- Active highway cruise control (allowing vehicles to be more closely spaced);

- Priority signal control for buses and emergency vehicles;

- In vehicle sign displays;

- Vehicle instability warning (e.g. cornering too fast).

I visited Beijing for the ITS World Congress in 2007, and saw that there are hundreds of Chinese firms and people with the talent to progress such systems in the country.  There are equally many firms worldwide eager to install and help operate systems.  The key frustration for most ITS professionals is the cost of retrofitting infrastructure and vehicles to take their technology, a problem that isn't so big where both infrastructure and vehicles are newer, and growth makes such a transformation potentially affordable.

However, my key interest is having a vehicle identifier that makes it cheap and efficient to do electronic free flow tolling. Then the matter of number plate recognition and maintaining a high quality number plate database (and enforcement system to recover fines), can be minimized if all vehicles are required to have a DSRC device that is sophisticated enough to be used for tolling.

Initially, it could be used to phase out manual toll booths, reducing congestion on them, but for Beijing it would allow for electronic toll gantries to be installed strategically to manage congestion. Each gantry could be priced at different times at different prices in order to target charges. Of course the best targeting could be done with a GPS based system measuring distance, but for now let’s consider what Beijing could do with a tag and beacon/DSRC type system.

The image below (click it to expand) shows how Beijing, within the 5th ring road, can be split between major arterials to form zones. The obvious example for an area charge is the very centre, but that would never be enough to address congestion on the scale required in Beijing. Far better will be to charge for trips between zones. Trips on the boundary roads could remain untolled, far better to allow efficient trips around the zones, but to penalise for travelling further.

Ring roads in red, radials in yellow, a framework for a charge?

Parallel to this obviously has to be to allow for growth in bus services, but I’d suggest they also must consider active modes as well, which have done extremely badly from Beijing’s rapid expansion of roads. Walking and cycling may have once been seen as modes used by people in poor countries, but they are cheap, healthy and occupy the lowest amount of road space per person moved. Enforcing pedestrian crossing, building over and underpasses, and cycle lanes will all be important in ensuring people don’t feel that it is unsafe to walk and bike short distances.

Meanwhile, Beijing could do worse than watch Jakarta as it seems likely to progress before it does, or to look at the extensive work undertaken in the 1990s on electronic road pricing in Hong Kong. However, the key enabler for all of this is enforcement, identifying vehicles and pursuing violators, without the means to do this efficiently, congestion pricing is not going to be effective.

Then there is the issue about what to do with the money.  The obvious answer is to use it to pay for road maintenance and upgrades, improved pedestrian and cycling facilities, or offset other taxes or restrictions.   The more transparency around this the better, and it could gain public support if people saw

Meanwhile, central government in China should consider how to future proof road transport by considering how it can built in ITS to its networks and vehicles from the start. For developed motoring countries like the USA, the cost and transition period to move to using technology on roads is high and long term. China has both the money, time and the forward growth to be a world leader in ITS and ITS managed highways. It can do so and at the same time, save lives, reduce congestion and pollution.

Meanwhile, Shenzhen is considering congestion pricing according to Xinhua, and it definitely has the experience of Hong Kong's extensive studies and trials to draw upon.

Does Beijing need congestion pricing?

An article published by the official Chinese government owned Xinhua News Agency claims to have been written by "lead infrastructure specialist of the World Bank Office, Beijing", and that congestion can only be resolved by introducing forms of demand management for road transport.

It gives an excellent summary of how rapid growth in car ownership and traffic in Seoul, Republic of Korea, caused similar pressures and that simply building subway capacity was inadequate.   Measures were increasingly taken to reallocate road space for buses,  changing planners laws that had required minimum numbers of parking spaces in new properties, raising parking charges and raising tolls.  Measures to enhance the attractiveness of walking and cycling have also been part of Seoul's formula.

The World Bank has suggested a series of measures to manage congestion, but warned that supply side solutions have never sustainably resolved traffic congestion in any major city in the world.   The solutions promoted have been a mix of :

-  Additional road infrastructure where it is economic (and particularly to facilitate bypass movements);

- Reallocation of road space for buses and cycling;

- Controls on vehicle ownership;

- Taxes and charges on vehicle usage.

The article makes it clear that demand management measures are needed in Beijing, and it is right.

I'd also add, in the Beijing context, that it should include significant enhancements to the attractiveness of walking and safety for pedestrians and cyclists.  I've been to Beijing twice, and one of the key features is how motorists get away with running red lights, ignoring pedestrian cross signals and cutting off pedestrians and cyclists.   Enforcement of traffic laws is extremely lax, and given the high proportion of residents who walk and cycle, maintaining this is critical.

For Beijing, public transport also faces overcrowding, so ensuring short trips are more economically and easily undertaken on foot or cycle is rather important, as is pricing public transport so it is financially operationally self sustaining.   This will allow it to grow and develop beyond the vagaries of public funding, but also importantly avoid public transport taking people from the active modes of cycling and walking.  Public transport should never be allowed to be neglected for lack of funds, but be able to respond to what demand management on roads (and economic growth) should present.

However, the road side is more critical.  A crackdown on driver licencing requirements, vehicle safety enforcement and driver behaviour would buy some time, save lives, reduce accidents (which themselves generate congestion) and enable the more complex measures to be introduced.   Market based parking, which sees planning rules on minimum parking requirements scrapped and for government owned parking to be priced to make a profit, would make a considerable difference.  However, beyond that the bigger question is congestion pricing.

China has used tolls to finance many of its major road building projects, particularly intercity motorways.  However, it has no standard system to raise revenue to pay for the ongoing maintenance and enhancement of the existing network (since government has been sufficiently flush with cash).  What it needs to consider is how road pricing might be introduced to raise revenue and manage congestion.

Beijing already has several ring roads orbiting the city, all of which could be thresholds for some form of congestion pricing.   Each could theoretically form a kind of cordon, with pricing imposed for crossing it in each direction, with pricing different at each offramp or crossing over the ring road.   In other words, a sophisticated form of Singapore's existing Electronic Road Pricing system, which allows prices to vary by road and time.  Such cordons would maintain free travel within individual zones, which could be divided by the ring roads and key radial highways.   Key to this is having good quality number plate databases and setting up accounts for motorists to pay.  The money collected could ensure maintenance and enhancement of the existing road network, and facilities for cyclists and pedestrians.  Technology need not be complicated, although I might suggest that given China's ambitions, the new US 5.9 GHz standard for Dedicated Short Range Communications (DSRC) has enormous potential to not only charge, but implement a wide range of safety and information based ITS applications.

The step beyond that would be distance charging, but Beijing's geography is such that the sort of system I have briefly outlined could deliver significant demand management benefits and have a high degree of disaggregation by time and location already.   It has the advantage of indirectly creating a distance charge by ensuring those who cross multiple cordons pay the most.

Unlike Tokyo, Seoul and Bangkok, China's cities now have the chance to introduce sophisticated forms of congestion pricing to ensure roads remain functional and mobile, as well as also providing significant environmental benefits.   China is not absent political barriers, despite the obvious reputation for being authoritarian, but it would appear that what is needed is to rebalance the enthusiasm for allowing people to become car owners, to implementing market reforms on parking and roads.