Presentation structure

What can be done to ensure that transport decisions take

into account the environmental costs of a

journey?

Dr Jillian AnableUK Energy Research Centre

The Centre for Transport PolicyThe Robert Gordon University

Presentation structure

1. Introduction2. Social Dilemmas3. What are the environmental costs of a

journey? 4. What do people pay already?5. What do people think they pay already?6. How could they be made to pay more?7. Points for discussion

Introduction

• Attempts to change the price signals have failed• Practical and political difficulties in using

economic instruments • Policy has shifted from attempting behavioural

change to tax concessions on cleaner vehicles and funding public transport

• YET research shows the impossibility of sustainable mobility without efficient price signals

SOCIAL DILEMMAS

ME

ME

ME

ME

External costs of transport

Non-market *Air pollution *Noise

*Waste pollution *Waste disposal

*Accidents *Congestion

*Community severance

*Land use impacts *other health

*Resource consumption

Market *Operating subsidies *Accidents

*Parking *Congestion

*Road infrastructure * Land value

*Resource consumption *other health

*Land use impacts

Implications of under-priced transport

• A major portion of transportation costs are external, fixed or non-market.

• Magnitude of non-market costs is significant compared with other costs and benefits normally considered in transport decision making.

• Users perceived costs are lower than the costs they impose

• Underpricing leads to inefficiency, urban sprawl, congestion, energy use and reduces travel choice

Can we put a price on it?

Samsom et al:The external costs of motoring, including

congestion, road maintenance, air pollution, road crashes, noise and climate

change, average 21p/mile, rising to £1/mile in London.

BUTThis figure underestimates the effects of

climate change

The cost of carbon

• Samson figures were based on £7.30 - £14.60 per tonne carbon dioxide

• Official government figure is between £40 and £160 per tonne – i.e around 5 times greater

If the price is right

• Speed up the introduction of cleaner and fuel-efficient technology.

• Encourage mode shift when appropriate (about 25% of all car trips are less than 5km).

• Make better use of logistics (for example car pooling).

• Rethink their car ownership when it is next time to do so.

• Offer better public transport (since the unfair advantage for cars would have been removed).

The real cost of motoring

• A 90p litre of petrol in April 2006 broke down into:

Product26%

Retailer/ delivery

7%Duty52%

VAT15%

European motoring taxes comparison – total taxation

• British drivers are taxed at the European average• Dutch are taxed on average 50% more than UK drivers

European motoring taxes comparison – taxation on use

0102030405060708090

100

p/litre

% tax

•Focus taxation on use rather than ownership in the UK.

•Lower taxation paid for ownership are offset by petrol taxes.

Costs of motoring

• The overall cost of motoring has fallen in real terms by 11% between 1975 and 2004

• Rail fares and bus fares have risen by 70% and 66% respectively

0

20

40

60

80

100

120

140

160

180

All motoring(6)

Rail fares

Bus fares

Aviation

• External costs of aviation have been put at £11bn a year in the EU

• Aviation has a ‘privileged position’ in the economy

• No VAT or duty on aviation fuel; no VAT on tickets and no VAT on new aircraft

• Less than 50% of the population fly• Catering for projected growth will negate carbon

savings from all other sectors combined and make reaching climate targets impossible.

Fiscal Options

• Business as usual (V.E.D. and fuel duties)

• V.E.D reform

• National road user charging – Fiscally neutral or revenue raising

• Distance based charges – fiscally neutral or revenue raising and weighted by CO2 and fuel type

• Company car distance charging

Business as usual

• If the pump price of fuel increases 10%:– Traffic will fall by around 3%– Fuel use will fall by around 7%

• To hold traffic constant against 2.5% underlying growth:– Fuel must increase by 8% above inflation

• To hold emissions constant:– Fuel must increase by 3.5% above inflation

• What would be done with all the revenue?

V.E.D. reform

• Budget 2006 – 7 bands from £0 - £210

• Differentials between £20 and £60

• Will this have an effect on behaviour?

• Others believe £300 between bands is necessary, with top band of £1800/yr for vehicles emitting 180g/km or more

• Improve the market demand for highly fuel efficient vehicles

Road user charging

• Fiscally neutral charge will have adverse environmental impacts

• A £16bn revenue raising reform would be needed to effect significant behaviour change

• Need clarity of goals – congestion or emissions?

Distance charge

• replacement of VED and Fuel Duty with a distance charging system

• Weighted by CO2 and fuel type for car model bands

• Fiscally neutral or to raise additional revenue

• More effective in stimulating behaviour change?

Carbon rationing

• Personal carbon allowances (PCAs) or Domestic Tradeable Quotas (DTQs)

• National market in carbon units within a nation’s carbon budget

• Between people not countries• Electronic system of rationing using

existing debit card technology• Equitable, transparent, guaranteed carbon

savings ….

Public Attitudes

• Around ½ the population acknowledge car use in general as a cause of climate change (even less for flying)

• Air quality bigger concern than climate change• First step – need to make people aware of how

much pollution they cause and what this means• Make these ‘costs transparent’ e.g. carbon

displayed on petrol pumps and airline tickets• There are signs of an increasing acceptance of

interventions to limit individuals’ emissions.

Questions

• Instead of modifying existing tax measures, could a different car taxation structure be more amenable to policies providing behavioural change signals, maintain government income, and be politically acceptable?

• What can Scotland do?• How develop public support?• Is it possible to design policy measures to

stimulate the adoption of clean car technologies as well as promote travel behavioural change?