Belgium to introduce nationwide light-vehicle vignette in 2027

Following on from the cancellation of the Brussels Smartmove programme - which would have implemented distance based congestion pricing, the three Belgian regions have agreed to establish a nationwide vignette (time-based charge) for light vehicles from 1 July 2027.  

It will cover travel on all motorways, highways and many major roads in all of Belgium, and cover all vehicles with a registered weight of < 3.5 tonnes excluding motorcycles. This includes all EVs, PHEVs and BEHVs, as well as diesel and petrol powered vehicles.

What is a vignette?

Vignettes are an unknown concept outside Europe, and are essentially access passes bought in advance of travel, for use of a road network within a jurisdiction.  Vignettes exist for light vehicles in the following countries in Europe:

• Switzerland
• Austria
• Czechia
• Slovakia
• Slovenia
• Hungary
• Romania
• Bulgaria
• Moldova

Of course you wouldn't know this from the EU's published map of light vehicle charging below which characteristically ignores non-EU Member States, such as Switzerland and Moldova.

Map of light vehicle road charging in the EU

Vignettes are legally what is called a “road user charge” under EU law. They are distinct from both tolls and distance-based charges (which are called tolls under EU law). Confusing? Yes. 

Tolls apply to specific facilities and are charged on actual use. Distance based road user charges are effectively metering for actual use travelled. Vignettes are time-based road user charges, which are sold on the basis of prepaying for access to a network for a set number of days.

Thinking of vignettes as prepaid access charges to a network of roads is perhaps the best explanation. It doesn't matter if you actually use the roads, you buy a "pass" to use them for a set period. It's a more flexible version of the annual vehicle registration or licence fee seen in virtually all jurisdictions.

What will they cost?

Belgium will be selling vignettes for 1 day, 10 days, 1 month, 2 months or 1 year.  This gives users flexibility to pay for a single transit of the country (common for driving from say France to the Netherlands) or for a longer visit. All light vehicles using the road network will be charged, including both Belgian registered and visiting foreign registered vehicles.

The rates for vignettes vary based on duration and the emissions class of the vehicle. A one year vignette will vary from €90 for EVs through to €125 for older higher emitting vehicles.  The charges for shorter periods for an average car (rated EURO IV) show there’s clearly much higher charges for very short periods.

1 day - €9 (EV €8.10)

10 days - €12

1 month - €19

2 months - €30

1 year - €100

Let’s be clear this is not a replacement for fuel tax. Vehicle owners in Flanders and Wallonia will see reform of registration fees, meaning the new vignette will partly be offset by such reductions. It is not clear if the same will happen in Brussels.

A major issue will be whether the European Commission approves of it. When Germany attempted to introduce a light vehicle vignette, it also proposed significant reductions in annual vehicle registration fees to largely offset the charge for German registered vehicle owners.  The European Union Court of Justice ruled that the proposal was discriminatory, because by reducing the fees for German vehicle owners, the burden of the vignette lay mostly on foreign registered vehicles.

It is expected to raise over €450m per annum gross, but around €300m of that would be offset by reduction in other fees. The net revenue will be used for road maintenance and upgrades.

How will it work?

Light vehicle owners will be expected to purchase vignettes through an online portal, linking their vehicle number plate to the vignette. Vignettes will be enforced by the use of automatic number plate recognition (ANPR) cameras on key strategic locations, with failure to pay enforced by a fine. The cameras will check if a vignette has been paid for a specific vehicle.

What about fuel tax?

No EU Member State has moved to replace fuel tax. Only Iceland has replaced part of its fuel tax with a distance-based road user charge, but it is not an EU Member State. A key issue in Europe is that the EU Energy Directive requires member states to maintain tax on petroleum at a minimum level of €0.359 per litre (US$1.59 per gallon). 

Any road user charge to replace fuel tax could currently only reduce it down to that level. Malta has its petrol tax at exactly the lowest limit, so it could not reduce it. The Netherlands has the highest petrol tax at  €0.845/l (US$3.74 per gallon), so could conceivably reduce fuel duty by a significant amount in exchange for a distance based road user charge. 

Could vignettes have wider application?

Clearly "yes" if it can be implemented in a way that avoid being overthrown by the European Court of Justice. So Belgium will be a test case.  It is entirely possible that if Belgium succeeds, other European countries will introduce light vehicle vignettes, especially the ones with few toll roads (think the Netherlands, Denmark, Sweden), and Germany may try again.  It might be seen as a step on the path towards distance-based charges for light vehicles. Why? Because Austria does this right now.

In 2004, Austria's Federal highway company - ASFINAG - introduced a distance-based toll, using DSRC technology, for heavy vehicles using its highway network, but also introduced a vignette for light vehicles. These two charges essentially fully fund ASFINAG (alongside other revenue it generates from facilities such as roadside EV charging stations), and balances charging by weight/distance and emissions for heavy vehicles, and pre-paid duration of travel for light vehicles. 

There may be a case in future for a nationwide distance based charge for all vehicles, on all roads, not just the ASFINAG network, but pressure for that appears modest at present, and would likely only come as a response to declining fuel tax revenue.

A vignette, as a prepaid pass for travel, is a particularly elegant solution for visiting vehicles, as it is easy to understand, sell and enforce. That compares to paying by distance, which would require some independent measurement of distance at the point of entry and exit. Without access to data from OEM telematics, mandating third-party devices with suitable applications, or requiring imaging of odometers at borders (which are almost entirely open), distance based charges by country for light vehicles become challenging to implement for visitors.

While Europe looks at this challenge, the implications for federal jurisdictions are considerable. It is entirely possible to see the United States being a patchwork of vignette systems for visitors and local vehicles, with locals paying at registration and visitors buying passes to travel in each others' states, maybe as an alternative to distance based fees.  

What's wrong about vignettes?

Vignettes are blunt, and they don't reflect actual road use. A one-day pass may be for a short distance of travel once, or it might be for a very long trip. A year pass covers both regular use a few times a month and daily.  So its reflection of use is poor.  Those who pay the most are actually those using it the least, as charges are relatively high for short period passes (visitors), but lowest for locals who pay annually, but regularly use the network throughout the year.  This may be politically popular (and questionable in terms of EU law*), but is not a "usage" based charge.

All of the European distance-based truck toll/ heavy vehicle road user charging systems replaced vignettes for heavy vehicles. The effect of this change was to generate much more revenue, because actual usage grew compared to estimated average usage based on time-based passes.

So I don't think vignettes are an ideal option to replace fuel tax, as a way of charging electric vehicles for road use, but they are not the worst option to do so. They might provide an alternative for just those vehicles, as a step towards distance based charging.

*I was part of the Booz & Co team that wrote this report for the European Commission ("Study on Impacts of Application of the Vignette Systems to Private Vehicles") in 2012. This is a comprehensive review of vignette systems for light vehicles in EU Member States at the time, including issues around rate setting and enforcement practices.

Terminology: Road user charging, tolls... what do people mean?

I've written about this before, but I thought it was timely to repeat the point...

Early on with this blog I bemoaned the plethora of words that have been created to mean different ways of pricing for road use, and the willingness of different jurisdictions to mix and match these terms.

I tend to use the following three terms to mean separate pricing concepts:

• Tolls: A fee, which may or may not vary by vehicle type, direction of travel or time of day, for using a specific segment of road infrastructure. Commonly bridges or tunnels, but also frequently new sections of motorway, superhighway to provide a faster, more direct connection than the pre-existing route. Tolls typically charge fees for passing specific points on that section, either a single entry or exit point, or multiple points. Most tolls exist to recover the capital costs of construction and the maintenance/operating costs of the tolled infrastructure, but some persist beyond the “payback” period for the road, and are used for other purposes. 

• Road User Charge (RUC): A fee which charges for use of a road network, based on consumption of road space through distance. It typically varies by vehicle type and may vary by location and/or time of day (but not necessarily except by identifying being on the priced network).  In some jurisdictions fees may vary by emissions category of vehicles. Fees are typically metered or by prepayment of distance. RUC exists to recover network wide road costs, and to reflect differences in consumption of road use, and for heavy vehicles different costs generated from network use.

• Congestion charging/pricing: Fees set based on time of use and location for the use of a road, set of roads, or network of roads (or a lane or lanes on a road). These may range from a single all day pass to use the priced road, or metered use of the priced roads. There will be a variation by time of day, with higher prices at peak times of demand, and there may be variations based on direction of travel. Congestion pricing is usually designed to change behaviour, reducing congestion or emissions. However, many jurisdictions design them to raise revenue to pay for specific infrastructure projects, including non-road infrastructure.

There are variations which crossover between these. Toll lanes and HOT lanes, look a lot like toll roads (but not all lanes) and congestion pricing (because they don’t operate a single price 24/7).  However, I will fail in having a universal application of these definitions because….

In Europe, road user charging is called “tolls” usually. Why? Because EU Directive 1999/62/EC… defines tolls (Section 2(b))

means payment of a specified amount for a vehicle travelling the distance between two points on the infrastructures referred to in Article 7(2); the amount shall be based on the distance travelled and the type of the vehicle

European Commission Directives call distance-based road charging “tolls”. This is why when “truck tolls” are discussed in Germany, Poland, Bulgaria, Belgium etc, it isn’t meaning a handful of roads being tolled, but an entire network. Although most European countries don’t apply charges to all public roads (Switzerland and Iceland are notable exceptions), most of these systems resemble road user charging systems, not tolls.  Of course, Austria and Slovenia look a lot like toll systems, because they use toll technology (DSRC toll tags) to measure road use on motorways for heavy vehicles, with fees based by distance. That’s where tolling and RUC look similar, noting that the technology used in both systems is not scalable to the entire road network, unlike the GNSS telematics-based systems in Germany, Belgium, Denmark etc. 

What IS called a “road user charge” in the EU, is actually a “vignette”. It is defined as:

means payment of a specified amount conferring the right for a vehicle to use for a given period the infrastructures referred to in Article 7(2)

That is a time-based prepaid charge for access to a national highway network, based on purchasing a set number of days. The Eurovignette (which only applies in Sweden, Luxembourg and the Netherlands (until later this year)) is the most well known example. Vignettes are being phased out, but they are legally called a “road user charge”. Therefore if you talk about RUC with Europeans, they may think you are talking about vignettes. 

In the UK, congestion charging is legally called a “road user charge”. That being a fee imposed for using a specific road or area. Local authorities (and the Secretary of State for Transport) can set up such schemes. They might resemble tolls (the Dartford Crossing is a "road user charge”) or congestion charging (“Durham”), and could be distance based on the specific road or area, but that’s not quite network wide distance-based road user charging.

In the US, congestion pricing is often used to refer to managed toll lanes or high-occupancy toll (HOT) lanes, because there are around 40 of these, and only one actual congestion charging type scheme – New York.  That of course confusingly has been called the Lower Manhattan Toll but is now the Congestion Relief Zone.

Also in the US, there is RUC, which is called Road Usage Charging (not User), because that is what Oregon chose to call it. There are also five weight mileage taxes (WMT) which are essentially RUC systems for heavy vehicles. However, they are not related to what those states are doing on RUC, as in the US, RUC is almost always about light vehicles.

Just to add to the confusion, Australia has a Road User Charge, which is not a toll, congestion charge or distance based charge, but is the component of fuel tax that heavy vehicles are subject to pay (they are entitled to refunds of the remainder when travelling on public roads, and a full refund of fuel tax when travelling off public roads). Australia's Road User Charge is a fuel tax on heavy vehicles.  This is entirely separate from Australia's policy and political discussions about a distance based road user charge, whether for electric vehicles or heavy vehicles to replace the fuel based road user charge.

I could add the other confusion, which is that heavy vehicles in Australia cover any vehicles with a gross registered mass of more than 4.5 tonnes (whereas in Europe and New Zealand it is over 3.5 tonnes). In the United States heavy-duty vehicles are those over 26,000 US pounds (around 11.8 tonnes). Vehicles from 10,000 US pounds (around 4.5 tonnes) to 26,000 US pounds are medium-duty.  Medium duty vehicles are not a category in Europe or Australasia, which sees them all as heavy vehicles. 

Confused?

It would be easier to call everything the same.  RUC is a great term, except in the UK and Europe.  Tolling is a great term, except in the EU where it also means types of RUC.  What really matters is what is behind the title, meaning:

• What configuration of roads are being charged? (a single point or a whole network)
• What is the chargeable event?
• What is the basis of the fee?
• What is the purpose of the fee?
• How is the chargeable event measured?

How should the UK Government reform the HGV levy?

In January 2018, the UK Government consulted on how it could reform it's heavy goods vehicle vignette scheme, also known as the HGV Levy.  The HGV Levy charges all trucks 12 tonnes and above for using any public roads in the UK, based on either one day, one week, one month or a year of use of the network (see this PDF for the rates).

For UK registered trucks it is relatively simple, as the Levy is only available as an annual charge collected in parallel with Vehicle Excise Duty (VED) - the annual vehicle registration tax.

The HGV Levy was introduced as a relatively simple way of raising revenue from foreign trucks using UK roads (as VED on the trucks liable for the HGV Levy was reduced on almost all those vehicles, meaning most paid nothing more).  

The HGV Levy was introduced on 1 April 2014 and in its first year earned £46.5m (US$65m) in revenue from foreign trucks (it also earned £146m from UK registered vehicles, although this largely corresponds to revenue lost from reductions in VED).

As a vignette, the HGV Levy is basically a prepaid fee for using UK roads based on time, as is similar to such schemes operating in several European countries.  The well-known Eurovignette is levied by Luxembourg, the Netherlands, Denmark and Sweden for using their roads.  Latvia, Lithuania, Romania and Bulgaria all also have heavy vehicle vignette charging systems.

What's wrong with the HGV Levy?

It's better than not having it at all, but it has the same fundamental limitation of a charge, for an activity that generates externalities which isn't based on usage, but on charging a right of use.  It effectively means that vehicles using roads the most are cross-subsidised by those using roads the least.

The HGV Levy will generate more revenue if the number of HGVs registered in the UK increases, but not if the current fleet is used more intensively.  Similarly, if more foreign HGVs enter the UK, there will be more revenue, but not if those that already visit the UK travel more often.   Obviously, the vignette may be said to incentivise operators to maximise utilisation (because they pay the same whether a truck is idle or not).

However, to properly understand whether or not the HGV Levy should be reformed, or not, there needs to be some clear policy purposes to it.  For all of the information in the consultation documentation, there isn't a clear stated policy purpose for the Levy itself, just some related policy goals of the UK government around the road freight sector. 

Those policy goals are:

• Encouraging individual HGV operators to plan more efficient route operation and use the most modern equipment.
• Helping to drive more efficient use of our roads.
• Reducing emissions which contribute to poor air quality and climate change.

These are all very well, but before any of that, I'd suggest the core objective of any such charge should be:

• In association with VED, seek to recover the fixed and marginal infrastructure costs of road use from vehicles that are charged.

As it stands, it doesn't do that particularly efficiently.  For a start, it charges vehicles more according to the number of axles they have.  Although this might be seen as a proxy for increasing wear and tear (based on Equivalent Standard Axle (ESA) Loading), it also penalises operators for having lower ESA loadings for the same tonnage.   However, in a vignette, it doesn't make a lot of difference.

How could the HGV Levy better meet the UK Government's policy goals?

The last of the goals could be better met by having emissions ratings included in the existing charging scheme.  EEVs and the highest Euro rating vehicles could pay less, as with the German system.  That would also, indirectly, encourage use of the most modern equipment (although it's far from clear exactly what public policy objective that achieves in and of itself).   That would be relatively simple, but the other goals (more efficient route operation and driving more efficient use of the roads) are difficult to achieve with a charging scheme that only distinguishes by vehicle classification and dates of permitted access to the network.

Distance, mass, location based charging is the logical next step

For any scheme to incentivise better use of the road network there needs to be a geographic element.  This is near impossible to do with a prepaid vignette.  There could be separate vignette products for use of the strategic road network (Motorways and major highways) compared to the local road network, but it is unclear what that would achieve? Virtually no trucks can usefully operate in the UK without access to the local road network, so that would be universal.  Charging separately for motorways would disincentives use of that network, which is hardly going to optimise road use.

Far more effective would be to charge for actual road use.  That means charging for distance consumed, based on vehicle class and with a location element, so that route choices can be influenced.

For example, it would be logical to incentivise greater use of motorways and major highways over local roads, because such roads tend to be built to standards that mean that the marginal wear and tear generated by a heavy vehicle axle passing over the road surface is lower.  Furthermore, such roads tend to be safer on a vehicle km basis and avoid built up areas.  As a further step, rates could vary between individual strategic and local roads at a later date, with lower rates for A compared to B roads and unclassified roads, to discourage use of residential streets to avoid congestion.

Environmental objectives could also be better met through a distance based charged, because it better links payment with road use, so that those that drive the most pay the most.  As in many European countries, rates could vary according to Euro engine rating, with higher charges for the lowest rating. See the charge rate structure for the German LKW-Maut system below:

German LKW-Maut vehicle classification

A vehicle has a emissions classification as above, which places it into a category.  This category determines whether a pollution charge is levied on top of the infrastructure charge.  The highest quality emissions category pays nothing for pollution, but the lowest quality pay €0.083/km (US$0.167/mile).  Infrastructure categories reflect numbers of axles, which is a simple proxy for vehicle mass.  It can argued that this is not strictly efficient, in that the more axles there are for a vehicle of similar mass, the lower the marginal wear and tear that vehicle imposes on the network.  However, given Germany only charges for use of the motorways and expressways, it is likely that the difference this makes to road maintenance costs in Germany is low.

LKW Maut per kilometre charge rates

So having emissions based charging will both reduce emissions and encourage use of newer vehicles.  Allowing distance and location based charging will enable more efficient route choices to be made.  The bigger question then becomes: How could the UK transition to mass/distance/location based heavy vehicle charging?

A possible path

Other European countries have moved from vignette based charges to distance charging, and the UK could combine this with a reduction in Vehicle Excise Duty to match the rates for light vehicles, so that charges shift from ownership to usage.  However, the UK will probably also need to offer some refunds for fuel duty as well, given how significant fuel tax is as a revenue source (and how unsustainable it is over the long term).  There are revenue benefits in replacing a proportion of fuel duty, because a shift to distance charging will protect it from fuel efficiency and changes in engine technology (albeit limited for many HGVs in the short term).   Any revenue collected from a new distance based charge from heavy vehicles would have to be hypothecated, and it would make sense for this to be a source of funding for both local roads and strategic roads for maintenance funding, alongside Vehicle Excise Duty from all vehicles.

Rate setting for the heavy vehicle charge should also be undertaken independently, by an independent regulator seeking to raise revenue to meet the needs of the road networks across the country, using a cost allocation approach that means heavy vehicles pay only their share of long run maintenance and capital costs of the network.  This also means reforming the whole funding and governance system for roads.  Highways England is a good start, but a similar reform should apply to local roads and the road authorities of the devolved administrations should follow as well.

The way to deliver a heavy vehicle charge would be to adopt an open market approach, certifying service providers to a standard of performance to measure road use and bill for it.  There would have to be procurement of a service around compliance and enforcement, to ensure vehicles paid the charge.  Refunds of fuel duty as part of the system may help increase compliance, but there will need to be considerable efforts made to promote compliance.

Any change should start with HGVs 12 tonnes and above first and transition down to 3.5 tonnes and above over several years.  What this should do is provide a platform for further change in the longer term as fuel tax becomes increasingly unsustainable, and mean that heavy vehicles are charged efficiently and effectively for wear and tear they impose on the road network, with rates able to be adjusted at a geographical and time of day level, to help encourage road use outside congested periods.

I doubt the current UK government will go down this path, but I can certainly see a future one doing so.

Germany's proposed introduction of road user charging for cars

Germany has had a distance-based road pricing scheme for heavy goods vehicles 12 tonne and over since 2005, initially for the autobahns, which has been expanded in scope to include vehicles down to 7.5 tonnes since 1 October 2015 and increasingly Federal highways (not just motorways).  Indeed, from 2018 all Federal Highways will be subject to the charge (known as LKW-Maut).  I've written more about the expansion here.  In time I'd expect the charge to cover all heavy vehicles down to 3.5 tonnes, as the logical next step.  Indeed, Federal Finance Minister,  Wolfgang Schäuble, has said that over time there will be road pricing on all public roads for all vehicles.  

Map of Federal Highways to be subject to heavy vehicle charge

A more controversial development has been the plan to expand charging to include light vehicles (up to 3.5 tonnes).   It was originally to come into force on 1 January 2016, but has been deferred because the European Commission (EC) believes it is illegal and there is some political controversy about it in Germany.  It is unclear when the car vignette (known as PKW-Maut) will be introduced.

German car vignette

The proposal is to introduce a time based charge, known throughout Europe as a vignette which is based on pre-purchasing access to the road network for a set number of days.  As it stands now, the proposal is as follows:

- All German licensed cars will be required to purchase a one-year vignette to use any public roads.  The rate be determined on environmental factors described as "will be calculated based on their engine capacity and environmental performance. For every 100 ccm increment of cylinder capacity up to a defined cap of 130 euros"

- All foreign licensed cars will choose from either a one-year, two-month or ten-day vignette only required to use the motorways.  Depending on the environmental category of the vehicle it ranges from €16 to €30 for a two-month vignette, or €5 to €15 for a ten-day vignette.

The days for a vignette are consecutive.  A one-day trip on the motorways requires a ten-day vignette, and it is valid for ten consecutive days, not ten separate one-day trips on different months.  

Vignettes will be fully electronic, meaning they are enforced by automatic number plate recognition. They will be able to be purchased online, or in registered retail outlets (filling stations).  

Gross annual revenue is estimated at €3.9 billion (in today's values presumably), comprising €3.2 billion from German drivers and €700 million from foreign ones.  Operating costs are estimated at €200 million per annum.  However, the countervailing reduction in the domestic vehicle tax will reduce revenue by over €2 billion per annum.   The estimated first year net revenue is €500 million, but this is expected to increase rapidly 

All revenue raised from the vignette will be hypothecated into the same transport fund as the heavy vehicle LKW Maut goes into, which is unlike existing motoring taxes.    The table below depicts the range of vignette prices. 

Level	Price of annual vignette		Price 10 days	Price 2 months
	From	To
1	-	39	€5	€16
2	40	69	€10	€22
3	70	130	€15	€30

EC objections

The EC launched an infringement case against Germany (it said it would launch a similar one on the UK for its HGV Levy, but the Brexit vote has effectively stalled this).  The two reasons it regards Germany as infringing the EU Treaty are:

- German drivers effectively will not pay as they receive a commensurate discount in vehicle tax;

- The vignette prices for short term visitors are seen as being disproportionately high.

The German Government is convinced its proposal is legal and personally I do not agree with the first point.  Vehicle tax is a national matter and it is up to Member States as to the level they set it at.  If they want to shift taxation from owning a vehicle to operating it, then it is up to them.  The mandatory one-year vignette for German vehicles using all roads, may be seen as making the vignette different, but this is discriminatory in favour of foreign motorists.  Foreign motorists don't pay when using roads other than motorways, but Germans do.  It would be much more equitable to apply the vignette for Germans to motorways only, but I suspect this would result in significant traffic diversion.  Otherwise, the vignette for foreigners could be applied to all roads, although the EU may still regard this as "disproportionate".  No Member State applies vignettes to all roads, but that is not in itself a reason why they should not be so applied (particularly as, for light vehicles, the marginal costs of their use of motorways is lower than that for local roads, and negligible in any case).  

In short, as long as the same price applies to foreign as to German vehicles, for the vignette, then what is done with other taxes appears to me to be a national matter.  

On the relative prices,  the issue is more subtle.  A vignette, as a daily charge to use the network, seeks to recover costs that should be something akin to usage.  That doesn't mean that a rate for a year should be 36.5x the price for 10 days (or vice-versa), bearing in mind that a short-term user is likely, on average, use the roads much more in terms of time and distance than a long-term user.  Short term users may transit the entire country, or visit it to many places, long-term users may spend days without using their cars.  

I will just point to this report of which I was one of the authors.  The methodology we used to compare the prices of short and long term vignettes was to establish the average daily price and the ratio in daily price between the shortest and longest period products.  

This extract from the report outlines the findings (for prices in 2011):

EU vignette price ratios between longest and shortest term products

As you can see, at the time Slovenia charged by far the highest price for a short term product compared to a long term one, probably because it knew it could charge high prices for what is a two hour drive between Croatia and Italy or Austria.  Austria, by contrast, had the lowest ratio.  What about Germany?  

Applying the same methodology, to the middle environmental category, the ratio per day is:

€0.15 per day for an annual vignette in the mid-range of "Level 2".

€1 per day for a ten day vignette in Level 2.  So the ratio between the long and short term product is 6.7, putting it much closer to the high charge countries than the lower charge ones.

Bear in mind since that report, following representations from the European Commission, Slovenia has altered its vignette rates by increasing its annual charge, so it now charges:

€0.30 per day for an annual vignette for cars;

€2.14 per day for a one-week vignette for cars, with a ratio now of 7.1

It seems difficult for Germany to justify charging cars over 6x as much for a short term vignette than a long-term vignette, as this presumes the average distance or time spent on the network is 6x greater for a 10-day vignette user than an annual user.   There may be statistics to justify this from the BMVI (Federal Ministry of Transport and Digital Infrastructure), but I have not seen them.  I would suggest the Austrian and Hungarian ratios of 3-4x are more realistic.

Where to from here?

I suspect that whatever the findings of the infringement action against Germany, it will continue with the charge, if only because it is unlikely that any fines will significantly offset the €500 million net revenue it will receive.

However, for Germany the vignette should be an interim measure.  It makes some revenue from foreign cars, which is what it is designed to do, but it isn't much of a reform in terms of changing behaviour or in encouraging the more efficient management of roads.

As it expands the LKW Maut in 2018 to Federal Highways, the case for expanding the scope for all vehicles down to 3.5 tonnes must be high, given that neighbours Belgium, Switzerland, Austria, the Czech Republic and Poland all have heavy vehicle road user charging systems that apply to such vehicles.

For light vehicles, it could do with observing the pilots underway in Oregon and California, and looking at move from vignettes to distance charging, even if it is as simple as odometer reporting. Furthermore, it should do so not simply to rebalance charges from taxes on owning vehicles (which are regressive) but also from fuel taxes which are inevitably eroding in yield and fairness, due to the appearance of more fuel efficient and electric vehicles.  Such a shift would apply primarily to Germans, but could mean Germany charging much lower fuel prices than its neighbours (down closer to the EU legal minimum fuel tax rate), and for all road use to be charged by distance and vehicle size, emissions rating.   Foreign vehicles could simply be required to have distance charging accounts and have distance measured whilst in Germany (and have it apply to all roads at the same rate, unless users want to pay according to road type - with higher charges for local roads, lower for Federal Highways and the least for motorways).  

Those that do not pay by distance, would not be able to receive fuel tax refunds.

Of course there are a number of complications and issues around doing this, but the platform already exists to do this.  Moving the LKW-Maut down to 3.5 tonne vehicles has to be the first step, but the case for distance charging of cars exists now and Germany would be well placed to look at how it could progress this, to replace the vignette it is about to introduce.

California launches Road Charge pilot

On the 1st of July the most populous and richest state in the US launched its pilot programme to trial road user charging, for both light and heavy vehicles, called the California Road Charge Pilot Program.  

California Road Charge pilot logo

For the next nine months, participants will simulate paying for road use by distance or time, after which Caltrans will assess the performance and public reaction to the various charging options.   Undoubtedly this is the highest profile live pilot of road user charging for cars anywhere in the world, and so not only is it being watched in the US, but around the world.

 Over 7,500 individuals had expressed interest in participating in the pilot with 5,000 having been chosen to participate.   Selection of participants has been partially focused on achieving a demographic spread based on income and location as seen below:

Target Demographic of California Road Charge participation

Charging options

Participants have five different options to choose:

1. A prepaid time permit which allows unlimited use of the roads over a fixed period of time, in 10 day, 30 day and 90 day increments (akin to vignette systems seen in Europe);

2. A prepaid distance permit, prepaying mileage in advance in 1000, 5000 or 10000 mile increments (similar to New Zealand's traditional Road User Charge system for light diesel and heavy vehicles);

3. A postpaid odometer reading distance charge, with the motorists reporting mileage through odometer readings;

4. Postpaid automated distance reporting using on-board vehicle technology without location; 

5. Postpaid automated distance reporting using on-board vehicle technology with location (to distinguish off-road and out of state driving).

The process for participation is outlined below.

California Road Charge pilot volunteer process

Privacy matters

I'm more interested in the three latter options, partly because I doubt that a time permit can co-exist with a distance based permit without road users gaming the options to their advantage.  There are advantages and disadvantages of all, and the key reason why there are multiple options is privacy.  In the US, there is considerable concern that any distance based charging system involving GPS will become a mass surveillance system.  This is being addressed in two ways.  Firstly, by offering options that do not involve location data being collected.  Secondly, by having private companies offer the service and collect the charge.  This separates the state government from the collection of data.

Competition

The pilot is not being operated by a one-size-fits-all single operator, but rather choice is the keyword, with competitive delivery of account service delivery.   This competitive dynamic should help to ensure the performance of all participating companies is enhanced, and may offer a taster of how deployment of this sort of system may progress in the future.

Azuga and Intelligent Mechatronic Systems (IMS - branded as Drivesync) are offering multiple mileage based accounts for participants (covering options 4 and 5).   Azuga offers options including a plug in device for the vehicle, a car's built in telematics (if compatible) and a smartphone app.  Drivesynch offers a plug in device or a car's telematics.   

Arvato Bertelsmann is operating the California State Account Manager, which is supplying options 1 to 3.  EROAD is offering solutions for heavy vehicle participants (options 4 and 5). 

Purpose

The reason for the pilot is simply revenue. The chart below is the California Air Resources Board forecast of future traffic demand and fuel consumption in the state.  This pilot is intended to develop a medium to long term solution to this problem which cannot be resolved by simply increasing fuel tax.

The basis for the pilot is Senate Bill 1077 which Governor Jerry Brown signed into law on 29 September 2014, which requires the state of California to design and implement a statewide pilot program to study the implications of a road charge model no later than January 1, 2017.

The Bill states as follows:

(a) An efficient transportation system is critical for California’s economy and quality of life.

(b) The revenues currently available for highways and local roads are inadequate to preserve and maintain existing infrastructure and to provide funds for improvements that would reduce congestion and improve service.

(c) The gas tax is an ineffective mechanism for meeting California’s long-term revenue needs because it will steadily generate less revenue as cars become more fuel efficient and alternative sources of fuel are identified. By 2030, as much as half of the revenue that could have been collected will be lost to fuel efficiency. Additionally, bundling fees for roads and highways into the gas tax makes it difficult for users to understand the amount they are paying for roads and highways.

(d) Other states have begun to explore the potential for a road usage charge to replace traditional gas taxes, including the State of Oregon, which established the first permanent road user charge program in the nation.

(e) Road usage charging is a policy whereby motorists pay for the use of the roadway network based on the distance they travel. Drivers pay the same rate per mile driven, regardless of what part of the roadway network they use.

(f) A road usage charge program has the potential to distribute the gas tax burden across all vehicles regardless of fuel source and to minimize the impact of the current regressive gas tax structure.

(g) Experience to date in other states across the nation demonstrates that mileage-based charges can be implemented in a way that ensures data security and maximum privacy protection for drivers.

(h) It is therefore important that the state begin to explore alternative revenue sources that may be implemented in lieu of the antiquated gas tax structure now in place.

(i) Any exploration of alternative revenue sources shall take privacy implications into account, especially with regard to location data. Travel locations or patterns shall not be reported, and legal and technical safeguards shall protect personal information.

The Bill establishes already that charges that vary by location are not being considered.  California's Road Charge is not a trojan horse for any form of congestion pricing.  It is seen as a pure revenue replacement exercise.

Of course California is at the forefront of plug-in electric vehicle takeup in the US as seen by this image from the US Department of Energy in 2015:

Electric vehicles in the US by state

California is clearly the highest, with Hawaii second (and also investigating running a pilot) with Washington, Georgia, Oregon and Vermont the remaining states with more than 1 per 1000 people.  Of course Washington and Oregon are developing or running pilots already.   Yet road user charging isn't primarily about electric vehicles, but about fuel efficiency.   Road Charge would replace California's gas tax if it were implemented.

Fuel tax isn't a good way of charging for road use

Fuel tax is a very poor way to charge for road use.  It is only a very rough proxy for road use and about the only thing it is useful reflecting is CO2 emissions.  It is not even good at reflecting noxious emissions, as highly fuel efficient diesel vehicles may emit many more toxins than less efficient petrol vehicles.

Fuel tax cannot reflect variations in infrastructure costs or demand/supply.  Neither can it adequately reflect the increased costs of wear and tear imposed on roads by heavier vehicles, as fuel consumption does not rise at the same rate as wear and tear which increases exponentially along with weight per axle.   Likewise, fuel taxx charges light vehicles differentially for infrastructure costs even though the marginal costs imposed by all of them are identical.  Those with smaller, newer vehicles pay less than those with larger, older ones.  

I hope that the California Road Charge Pilot gets a good response from participants and lots of useful information to inform the assessment of the options.  Getting the public involved is important.  I wish all participants the very best.  California, the USA and the world are watching.

More details at the pilot project website.

California Road Charge brochure download here

California Road Charge Pilot Technical Advisory Committee meeting details here 

Disclaimer: D'Artagnan Consulting is supporting Caltrans in managing the California Road Charge and I am working on the California Road Charge Pilot Program.

California's Road Charge Pilot Program progressing

The most exciting trial of road charging in the world today is the one that is about to start in California.  California is going to pilot 5000 volunteers, a mix of private and commercial vehicles, for five options that it seeks to appraise.  The policy intention is clear.  The intention is to replace the fuel tax with a new way of charging for road use.  Why? Because the significant growth of electric, hybrid and ultra-fuel efficient vehicles is eroding gas tax revenue, and even the existing proposal to increase the gas tax for the first time (and remove the current fuel tax swap) will not provide a sustainable solution to California's highway funding dilemma.

It is no exaggeration to say that the rest of the US is watching California.  If the California Road Charge Pilot is a success and there is broad agreement to implement it, then it is likely other states may follow.  Yes, Oregon was first, but California has the largest GDP of any state in the USA (indeed its economy is larger than Brazil, Italy, India or Russia).  

As California prepares for the launch of its road charge pilot program on 1 July, Caltrans has  announced the companies that will be managing the accounts for the 5000 volunteers during the pilot:

- Azuga (Azuga is already an account manager for the OReGO pilot in Oregon);

- Intelligent Mechatronic Systems (a Canadian company that supplies telematics and connected car technology);

- Arvato Mobility Solutions (a German company that provides outsourcing solutions for mobility); and 

- EROAD (a New Zealand company that is an account manager for the NZ and Oregon weight-distance road charging systems).

Azuga and Intelligent Mechatronic Systems (IMS) will offer mileage based accounts and Arvato will offer a state-run account management service.  EROAD will manage all heavy vehicle accounts for the pilot.

The pilot has an excellent website here which has useful information.  There are links to other information including this fact sheet (PDF).  Details on decisions on how the pilot will be implemented are here (PDF).

The following five charging options are to be piloted:

- Time permit: Purchase of unlimited use of the roads for a set period of time (similar to "vignette" systems in various European countries);

- Mileage permit:  Purchase of a set number of miles to use the roads, in advance.  Once the permit is exhausted, an additional permit would be required  (similar to New Zealand's manual Road User Charge system);

- Odometer charge: Pay for miles used based on periodic odometer readings, after they have been driven.  This is similar to manual weight/distance taxes in a few US states.

- Automatic mileage reporting including general location: Pay based on in-vehicle technology measuring distance travelled.  A third party service provider would receive this information and bill the account holder.  Location information would only be used to avoid charging out of state and off-road miles.

- Automatic mileage reporting without general location: Similar to the above example, but no geographic data is supplied.

All but the first option involve distance charging, but all but the last distance charging option would raise the issue of crediting for out of state or off-road miles.

Volunteers will not actually pay any charge, but will choose options of simulated charges to test the technology and participant responses to the various road charge options. Azuga, IMS and EROAD may provide value added services at no cost to volunteers as part of the pilot. Volunteers will choose an account manager in June.  The graphic below outlines what volunteers need to do to participate.

California road charge volunteer process

(Disclaimer: D'Artagnan Consulting is advising Caltrans on this project)

NOTE:  This is the 500th post of this blog.  I hope you enjoy reading the posts and find them interesting and informative.  I know I have covered some matters in past years that I have not covered more recently.  Rest assured I have more time to dedicate to blog articles, so there will be consistently fresh content every week.  Best regards, Scott