How do you put a price on trucks’ impact on society?

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of PLC.

Studies on the environmental and societal costs of road haulage should look at all externalities – from road wear and tear to climate change, says T&E. [joiseyshowaa/Flickr]

Hauliers claim that trucks are overpaying in taxes and charges compared to their impact on the environment and society. But the reality is that road transport is now Europe’s biggest climate problem, writes Samuel Kenny.

Samuel Kenny is freight and rail transport officer at sustainable transport group Transport & Environment.

How do you put a monetary value on the health impacts of air pollution, a price on the environmental damage from CO2, or the safety of pedestrians on a specific road? It requires assumptions on the ‘worth’ of something like asthma caused from nitrogen oxides or the price of grief. Insurance companies need to deal with such calculations all of the time, but such methodology is an essential part of policy discussions. Before you add “external costs” to your long list of Brussels jargon, we should establish what this economic term actual means. “External costs” is the concept of applying a monetary value to things like road damage, air pollution, climate change, and accidents.

The EU has enshrined in its treaties a goal to move towards ‘“the internalisation of external costs”, which would mean that every transport user would pay a ‘fair price’ for the impact that their behaviour has on society. The belief is that such a practice would encourage us to minimise our environmental impact and would also help avoid situations where some people cause damage while the rest of society picks up the bill.

The lobbying group for EU trucking companies, the IRU, recently published a report claiming that trucks are overpaying in taxes and charges compared to the impact of some of their external costs. The report raised a few eyebrows. Not only does it go against decades of established science showing trucks don’t cover their external costs at all, but the report was actually carried out by the very same consultancy that did a study for T&E showing trucks are paying for less than 30% of their external costs.

How can one report say that trucks cover 130% of their external costs when the same consultancy found in a report to T&E that the figure is closer to 30%?

The major difference is that the IRU report only looks at motorways. Now clearly trucks drive on more than motorways – they also drive on national roads, rural roads, etc. Doing a study on the damage caused by trucks and looking only at motorways is a bit like doing a study on poverty in Brussels and not wandering beyond the borders of Woluwe-Saint-Pierre and Uccle. The T&E report had looked at the entire road network.

In addition, the IRU report chose to only consider some of the external costs from trucks (the 130% only accounts for infrastructure costs, air pollution, and noise). T&E’s report looks at all of the “external costs” – from road wear and tear to climate change (see graph).

External-costs-of-heavy-goods [Source: T&E, CE Delft]

Apart from cherry picking the roads and external costs that suit the IRU’s argument best, there are a few other tricks that influence the outcome of the report. For example, when calculating the impact of trucks on things like climate change or air pollution, the study makes sure to only consider activity that’s on motorways. BUT when they’re calculating how much users pay to cover infrastructure damage, they decide not to attempt dividing this to only get the charges applied on motorways.

There are other methodological choices in the study that aren’t worth going into detail on, like the fact that it doesn’t include congestion as an external cost because part of the cost is borne by the road user. It reminds me of the cartoon of a guy sitting in his car in the middle of a traffic jam, shouting “why are all of these people in MY way” with the person behind him saying the very same thing. The 130 figure also doesn’t include important external costs like climate change, accidents or upstream emissions.

Why do we care about this IRU report? Well, it was published right before the Commission published a major reform of Europe’s road charging legislation. The Commission has always supported expanding distance-based charging and increasing internalisation of external costs. The IRU report is supposed to give scientific credence to their own claims that truckers are already paying too much.

The reality is that road transport, and trucking in particular, has an environmental problem – transport is now Europe’s biggest climate problem. We need to agree on progressive CO2 standards for trucks, transition to zero emission vehicles, and develop ways to make logistics more efficient. Smart road charging – that encourages efficient vehicles and efficient use – has a role to play in all that. Let’s not dispute this and instead let’s focus our time and efforts on designing a system that works for truckers as well as the environment.

External-costs-of-heavy-goods-2 [Source: T&E, CE Delft]