Presentation structure

1. 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

2. Presentation structure • Introduction • Social Dilemmas • What are the environmental costs of a journey? • What do people pay already? • What do people think they pay already? • How could they be made to pay more? • Points for discussion

3. 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

4.    ME ME    ME    ME    SOCIAL DILEMMAS

5. External costs of transport

7. 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

8. 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. BUT This figure underestimates the effects of climate change

9. 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

10. 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).

11. The real cost of motoring • A 90p litre of petrol in April 2006 broke down into:

12. European motoring taxes comparison – total taxation • British drivers are taxed at the European average • Dutch are taxed on average 50% more than UK drivers

13. European motoring taxes comparison – taxation on use • Focus taxation on use rather than ownership in the UK. • Lower taxation paid for ownership are offset by petrol taxes.

14. 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

15. 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.

16. 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

17. 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?

18. 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

19. 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?

20. 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?

21. 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 ….

22. 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.

23. 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?