Swings and roundabouts

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The Danish Productivity Commission is getting behind road pricing, but it can’t stop politicians from rejecting it, reports Scott Wilson

Denmark is getting to be a little more like the Netherlands when it comes to road pricing. The issue is regularly on the agenda, and swings from being promoted to being rejected on a regular basis.

In 2011 the government supported charging with a debate focussed on a cordon charge for Copenhagen.

However, by 2012 it government had gone cold on the idea. Only one of the parties in the ruling coalition (the Socialist People’s Party) supported it, with the Social Democrats far less keen.  The debate had become about opposition to the proposed cordon type implementation of a charge, and the expected net revenues couldn’t fund expectations of radically lower public transport fares.

Denmark’s focus on road pricing moved over to charging heavy goods vehicles by distance. This had also been supported by the new government in 2011.  The plan was to charge all trucks 12 tonnes and above to use all main roads so as to increase revenues and reduce the environmental impact of trucks. But it was also to replace Denmark’s participation in the multi-country time based charge called the “Eurovignette”.

Yet by April last year the lorry road pricing programme had also been shelved. The reason being that expected costs were going to be too high relative to revenues.

So now with the Copenhagen Post reporting that Denmark should have some form of road pricing, I am sceptical that anything will come of it in the short term.

The report focuses on charging for congestion, suggesting something different to what was envisaged for the Copenhagen crdon charge or the lorry road pricing scheme.

The report stated that the Commission proposed: “Charging drivers 2.5 kroner (about US$0.46) for every kilometre they drive in the city centre during rush hour in exchange for reducing or abolishing other car levies”

In other words, instead of it being an additional tax, it would be a more efficient way of charging for road use, compared to the punitive taxes imposed on owning and buying cars in Denmark.

Danish Government reaction

Unfortunately, the Danish Government is a bit stuck in the past, supporting improvements to public transport in the belief that it can attract people to shift from cars into other modes, despite this being a policy that has been applied for decades now, with limited success.

The proposal of distance based congestion pricing was previously made by the Congestion Commission, set up to develop options to address congestion in Copenhagen, in response to the previously scrapped proposal for a cordon based congestion charge.  According to the Copenhagen Post  it saw distance, time and location based charging as “the most effective tool to reduce congestion”, but the Minister regarded the concept to be premature.   So the traffic management, cycling and public transport proposals will be introduced first.

Enhedslisten, the far-left Red-Green Alliance, which is a coalition partner of the existing government, supports a trial of such road pricing.

Interestingly however, the Productivity Commission also comments about public spending on public transport, suggesting that it is wasteful to spend so much money to provide capacity that is only used at peak times.

It makes the rarely used, but quite correct point that the people using public transport at peak times tend to be those on higher incomes and employed, whereas those at off peak times, when such capacity is not needed, are not.  It suggests, just as with roads, that peak time fares should be higher to help recover the high costs of peak capacity.

It notes that much public spending on transport projects has been wasteful with a fifth of projects not being worth building at all, including extensions to the Copenhagen Metro.  It also criticises proposals for light rail as being projects that take space from road users at very high cost with only marginal improvements over buses.

This suggests that leftwing and environmentalist critics of road transport are not advocating effective or efficient solutions when they focus solely on supporting any public transport improvements.

Where to for Denmark?

It appears clear that nothing will happen under this Government.  However, I think the real potential in Denmark is (ignoring the debacle of lorry road pricing which seems to have adopted a cost plus approach when more efficient solutions may have been available) in establishing a voluntary system for new vehicle purchasers of avoiding purchase and ownership taxes, and even some fuel tax, by paying by distance.

It will take a while, and will involve a trial over some years, but over time it could de-risk, keep costs under control and allow for a more publicly acceptable way of shifting towards road pricing.

Scott Wilson is  associate director, LeighFisher and writes a regular blog on road pricing: http://roadpricing.blogspot.com

Article taken from the July 2013 issue of RUC Magazine