A fair deal for cars Strategies for internalisation Huib van Essen, 6 December 2012
Buzzing around for decades Fair and efficient pricing Marginal Social Cost Pricing Internalisation of external cost Market-based instruments Polluter pays principle User pays principle Level playing field 2
More than theory 3
Why pricing? Underlying objectives Influencing behaviour: Incentives to users Limit negative impacts (environment, safety, economy) Economic efficiency: very cost effective Generating revenues for: Financing transport means (infrastructure, cleaner modes etc.) Financing mitigation measures General budget (or reduce other taxes such as labour taxes) To increase fairness (equity): Between users (paying less when driving less) Between transp[ort modes (level playing field) 4
Various approaches possible Starting from costs (internalisation): Cost estimates Cost drivers Estimate costs per vehicle type and traffic situation Design charging scheme Starting from (environmental or other) objectives: Type and size of desired impacts Required changes in technology and/or behaviour Estimate required price incentives Design charging scheme 5
Different instruments with different impacts Key instruments: fuel-related vs distance-related pricing Road transport has (compared to costs and other modes): Very low distance-based charges Relatively high fuel taxes Other instruments: Parking fees => parking related costs Congestion charges => congestion costs Vehicle taxation => fleet and technology related Tax deduction for commuter travel => implicit subsidy on (car) transport Company car taxation => fleet and technology related, & implicit subsidy 6
Fuel-related pricing First best to charge for climate costs and emissions from fuel/power production Efficient: incentives for all types of fuel reduction: Vehicle fleet Vehicle use (driving style, occupancy rates, car sharing) Modal shift Demand Price sensitive: 10% higher fuel cost, 6% less consumption (long term) Options for policy development: CO 2 -based component in excise duties (with increasing CO 2 price) Emission trading for transport (subject of new study) 7
Distance-related pricing First best to charge for costs of infrastructure, air pollution, noise, accidents Differentiated to vehicle type, location, time of the day Price sensitive 10% higher cost per km, 4 to 10% less kms (long term) Policy development: Kilometre charges on all roads For all road vehicles: cars, vans and trucks Options for policy development: Extension of existing km-charging schemes for trucks: To other roads (e.g. urban areas) To other road users Start with a low-tech scheme for cars (e.g. annual measurement) Voluntary scheme (raising annual taxes for cars that do not join) 8
Barriers and ways forward Barriers: Public en political acceptance Risk of first mover: complicated scheme, many users (cars) Privacy issues No significant legal barriers for Member States Ways forward: Member States play key role EU could further stimulate/harmonise: Eurovignette Directive (mandatory charging?) Interoperability electronic tolling (2004/52/EC) Energy Taxation Directive (or ETS for transport) Harmonization of vehicle taxation (e.g. differentiation base) Integrate pricing in EU funding rules 9
Pricing no silver bullet for sustainability Pricing can significantly contribute to more sustainable transport EU, national and local level all play a role Pricing can complement but not replace other policies (at all levels): Regulation (vehicles and energy carriers) - EU Infrastructure policy - all Subsidies/R&D/support - all Spatial policy national/local Traffic management and speed policies national/local Parking policies - local 10
Questions/discussion 11