In December 2007 the Dutch Cabinet announced that it had agreed in principle to introduce a vehicle charge per kilometre on all Dutch roads according to the time, route and the environment characteristics of the particular vehicle. The initiative joins a growing list of measures both in the EU and outside the EU aimed at improving mobility and encouraging the reduction in vehicle emissions.
Please see below to read our commentary where we consider recent developments in road user pricing in the Netherlands and the UK; the technology involved; implications at EU level and some of the risks and opportunities that arise from this.
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In December 2007 the Dutch Cabinet announced that it had agreed in principle to introduce a vehicle charge per kilometre on all Dutch roads according to the time, route and the environment characteristics of the particular vehicle. The initiative joins a growing list of measures both in the EU and outside the EU aimed at improving mobility and encouraging the reduction in vehicle emissions. We consider below recent developments in road user pricing in the Netherlands and the UK; the technology involved; implications at EU level and some of the risks and opportunities that arise from this.
Dutch proposals: "A different way of paying for mobility"
The Dutch proposals will apply charges on the use rather than the possession of a vehicle. Coined "the honesty principle" the idea is to gradually phase out and replace Dutch road tax and sales tax. In addition to a charge per kilometre, there will be weighted charges dependent on the environment characteristics of the particular vehicle and the time of travel. Part of the Dutch Government's aim "is to persuade motorists to drive clean, fuel efficient cars...". The revenue generated will be used to finance the construction, management and maintenance of road infrastructure. Two other pricing instruments; a toll payment for new infrastructure and an acceleration charge, to cover the interest costs for the early allocation of monies to tackle congested areas, are expected to be implemented around the same time as the kilometre charge.
Advocates of this proposal claim that the sophistication of the proposed scheme will make it more advanced than any other scheme presently implemented in the world because it will incorporate "real time" distances rather than focusing on initial movement or entries into certain geographical zones.
The Dutch Cabinet recognises that technical and policy related co-operation will be required with neighbouring countries. Whether the environment characteristics of charging will incorporate more than CO2 emissions remains to be seen.
The present plan is to apply the charges to freight transport in 2011 and for the entire system to be operational by 2016.
Clearly technology will be key to the success of the proposals. Extensive trials of global navigation satellite systems are anticipated. The type of system to be used has not yet been determined. Ideas under consideration include a satellite navigation device in the vehicle or a roadside registration system. The Government project group formulating the charging scheme (called Anders Betalen voor Mobiliteit) and the private sector have agreed to continue to liaise with each other in the interim in order to share knowledge about developments in the scheme's proposition and continuing advancements in technology. Interestingly, during the consultation only one vehicle manufacturing related company was listed as a respondent to the consultation. In contrast many telecoms/technology companies participated in the consultation. Any person may register an interest in obtaining updates by emailing the Dutch Ministry of Public Works and Water Management (max.van.heijst@minvenw.nl). It is proposed that meetings will be held between the Ministry and interested expert private sector parties.
Further information is available under "road pricing".
UK: "Road pricing demonstrations project"
In the UK car owners are subject to various levels of taxes and charges related to CO2 emissions and, in London, congestion charging. The Government has stated that it has not yet taken a decision on a possible national road pricing scheme against which there has been wide public opposition. Having said this the Local Transport Bill, which is expected to receive Royal Assent before the summer 08 recess, will reform (if passed) existing legislation (Transport Act 2000) in order to provide more flexibility in creating local schemes. In 2007 the Department of Transport invited bids for regional and local schemes that combine road pricing with a major investment in local public transport. In March 2008 the Secretary of State for Transport announced that up to £200 million a year to 2018/19, along with additional development funding, will be available to support the development of local packages of measures that include better public transport and "demand management" as part of the Transport Innovation Fund ("TIF"). Greater Bristol; Cambridge; Durham; Greater Manchester; Shropshire; Tyne & Wear; and the West Midlands are all areas which have been identified for potential funding for road pricing schemes. On 9 June 2008 the Transport Secretary approved a proposed scheme in respect of Manchester that included congestion charging which shall be subject to public consultation. Proposals are presently being considered for Cambridgeshire.
Also in March 2008, the Department of Transport issued a formal invitation to tender for the road user service provider element of the road pricing demonstrations project. The tender document states that road pricing would be more effective if it could target congestion by charging on the basis of where and when a journey is being made and states that the "project will explore how a scheme charging by time, distance and place could be designed so that it can safeguard people's privacy whilst operating reliably, accurately and cost effectively." Notably there was no mention of including emissions at this point in time and one cannot help but think that this was potentially a serious omission. The target procurement timetable was May/June 2008 for the appointment of successful bidders but no announcement has yet been made.
European Commission's activities
Moves by individual Member States to encourage the development of "real time" applications are consistent with the European Commission's push to promote the development of Intelligent Transport Systems ("ITS") which integrate communications and information technology with transport infrastructure. The Commission has earmarked €2 billion in financial support to the development and deployment of ITS technologies recognising their potential amongst other points to contribute to environmental policy targets. Consultation on an ITS action plan ended in March 2008. A Commission communication on the results of the final form action plan is anticipated in mid July 2008. Base environment benefits obtained through ITS such as less congestion could easily be layered with distance and or emissions based pricing structures, in an attempt to further reduce emissions levels.
Risks and Opportunities
The above are examples. Other countries are also considering various schemes. The political desire to reduce congestion, reduce emissions and include more intelligent traffic systems is an area of policy and legislation which is set to expand further. There are very distinct opportunities ahead for the suppliers of the appropriate road pricing technology. For vehicle manufacturers these developments would need to be closely watched. Clearly those manufacturers which produce the cleaner and more efficient vehicles are likely to be supported by these developments. Combined with significant increases in fuel costs we shall also perhaps need to keep an eye open to whether these combined forces give rise to changes in commuting/travel patterns or distances which might conceivably have an impact on future real estate development.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 17/06/2008.
