On paper, congestion charging makes perfect sense. It’s a way of harnessing the power of the market to swiftly reduce the problems associated with traffic congestion, such as emissions and delays to the essential movement of goods, services, and people, without the need for massive investment in new transport infrastructure.
However, there are questions: Can it be fair and equitable? Is it simply another revenue source to fund transport system improvements, or can it target the highest carbon emitters and potentially benefit low emitters? Do charges really change behaviours? What examples of effective (and ineffective) charging regimes have been implemented overseas that we may learn from, what is our largest city contemplating and will this be effective in reducing carbon emissions?
When researching and writing the paper CHARGE: Can Charging Users Reduce Transport Carbon Emissions I sought to answer these questions and to propose ideas that could have real impact on the transport sector carbon emissions.
The CO2 emissions from road transport in Aotearoa are increasing and recent trends suggest that emissions are likely to get worse before improving, as more kilometres are driven, and less efficient vehicles dominate our sales figures.
To reduce carbon emissions from road transport, there are several avenues in terms of taxing, charging or pricing that might be utilised, with different objectives and resultant outcomes.
Charging as a means of road traffic carbon reduction
This will impose a higher sales tax or duty on new (or potentially imported used) vehicles that have high CO2 emissions, in an attempt to influence buyers towards more fuel-efficient choices. The Government is working to introduce the “Clean Car Import Standard” aimed at achieving the overall reduction on average emissions from the NZ vehicle fleet over time. It is intended that the Clean Car Standard will decrease the price of low emission vehicles, including electric vehicles (EVs), and increase the price of higher-emission vehicles, both new and imported used.
While this is an excellent idea, it’s unlikely to make a dramatic impact on vehicle emissions in the short term given the age of NZ’s fleet given the average vehicle age is 15 years.
NZ has had a fuel excise tax for many years, currently the total tax proportion of retail petrol price is about $1.15 per litre. The fuel excise is directed into the Land Transport Fund, which largely pays the maintenance and upgrade of the road network and public transport fare subsidies.
In July 2018, Auckland Council imposed a Regional Fuel tax of 10 cents per litre on top of the general excise tax, put towards upgrades to the Auckland transport system, including both road and public transport projects.
Overall, this works well because it’s a true user pays system, that is relatively easy to implement and collect, and easily understood by users.
However, at the current rate it doesn’t achieve the level of behaviour change needed to lower carbon emissions. To achieve a 20% reduction in transport carbon emissions would require doubling the fuel price. While this level of taxation could raise considerable funds to invest in alternatives to driving, it’s unlikely there would be much political or public support.
Congestion charging is designed specifically to reduce congestion in cities, rather than to reduce fuel use or CO2 emissions. Reduced emissions are usually a desirable by-product.
Problems congestion charging creates include drivers seeking alternatives routes rather than seeking new travel modes and new trips created as a result of lowered congestion – trips that less price sensitive and more time sensitive (taxis, couriers).
Internationally, congestion charging has worked to reduce traffic congestion and raise investment funds for transport alternatives. Cities such as London, Stockholm and Singapore have lowered vehicle emission by 10-16%.
- Emissions-linked charging schemes
As of 2019, there are three separate pricing mechanisms in London, the central London Congestion Charge, and the Low and Ultra-Low Emissions Zones.
The Low Emissions Zone covers most of the Greater London area and, as of March 2021, enforces a £300 penalty charge on any commercial vehicles that fail to meet the emissions standard.
The Toxicity Charge applies to vehicles that fail to meet Euro 4 standards, typically diesel and petrol vehicles registered before 2006, were charged £10 to enter the central zone during Congestion Charging hours (on top of the charge). This has resulted in a 15% reduction in heavy polluting vehicles in the Zone.
The Ultra-Low Emissions Zone has a daily charge for vehicles that don’t meet strict emissions standards. This has resulted in a 6% drop in carbon emissions.
Of these, only the proposed NZ Clean Car Import Standard is specifically designed to result in reduced CO2 emissions from road transport, the others are designed to raise funds for transport improvements, to reduce traffic congestion, or to improve air quality. Any reductions in CO2 emissions arising from fewer vehicle trips of more efficient vehicle choices are a desirable but relatively minor outcome in these schemes.
