Umberto de Pretto is the secretary-general of the International Road Transport Union. He sent a written reply to questions from EurActiv.
Do you agree with those who say the road haulage sector should ‘internalise its externalities’ – or pay for its knock-on costs such as pollution, road safety, noise etc - in absolute terms?
Road transport, like every human activity, has an impact on the environment. Few other industries can boast about the environmental improvements achieved by the road transport industry. We have reduced our toxic emissions by up to 98 % since 1990. Moreover, we have a commitment to further reduce our CO2 emissions by 30% by 2030.
The main task of governments should not be limited to protecting the environment by suppressing any human activity or by suppressing road transport, upon which modern lifestyle and society depends. Their task should rather be to optimise all economic and human activities by promoting efficiency, especially in road transport.
The problem is that policy-makers consider the internalisation of external costs merely as a panacea and tend to apply the limited and simplistic ‘polluter pays’ principle. This approach is a tax collection scheme, which is easy to implement. But it is by no means an adequate response to the internalisation debate for a very simple reason: Policy-making should be based on some form of regulatory impact assessment. This should be nothing less than an in-depth cost-benefit analysis, and it is central to the EU’s “Better Regulation Initiative”. The ‘polluter pays’ principle is in total contradiction with this established approach, since the decision over who should pay has automatically been taken before any cost-benefit analysis or impact assessment can occur!
In economic circles, the shortcomings of the ‘polluter pays’ principle have been exposed time and again. Its suitability as a sound basis for internalisation policies has been superseded by the Cheapest Cost-Avoider Principle (CCAP), for which Economist Ronald Coase received a Nobel Prize. Its fundamental principle is that the party which can best prevent or abate any damage at the lowest cost to the overall economy, should take action.
Local air pollution, noise, CO2 emissions and accidents are already 99% internalised via various means, including registration, road user and energy taxation and through insurance schemes. Congestion costs are also already internalised by the road transport industry, unlike for other road users, such as private cars, which form the bulk of road traffic!
In this context, any double taxation or charging for road use or external costs is unacceptable for us. Why should the road transport sector be the only mode paying for its externalities? I strongly doubt that railways cover their infrastructure costs and externalities, as they are constantly fishing for money leveraged from the road transport sector. Several independent studies have demonstrated that, on average, the rail freight industry covers less than 50% of its external costs. Revenues from road infrastructure charging or internalisation of road externalities should not be used to fill the bottomless pits of railways!
Further charging will result in cleaner transport only if revenue is earmarked for reinvestment in the mode from which it was drawn, to effectively reduce external effects through at-source measures, such as incentives for the introduction of clean vehicle technology and investment in infrastructure.
A CE Delft report in 2009 found that even when total taxes and charges to HGV operators were considered, the industry paid no more than 45% of its external costs – which they said amounted to €144 billion euros (in 2006). Why are you so opposed to redressing that cited imbalance?
The CE Delft Report is just one source that was written and used to justify a new Commission proposal to introduce the internalisation of external costs in road freight transport. According to other scientific studies, up to two thirds of the external costs of road transport are already internalised through fuel duties, road tax, insurance premiums, the existing eurovignette and tolls. When congestion is not taken into account, 99% of road transport externalities are already internalised according to various credible studies. Moreover, transport operators already pay for congestion costs through higher fixed and variable costs, time losses and lost opportunity costs. We have requested on several occasions that the Commission carry out a neutral, comprehensive study which identifies who already pays what and how much, in terms of taxes, charges and duties, before a decision is taken on the need to pay more, by whom and how much. Until now, the Commission has been unwilling to undertake such a study.
How do you think road charging can best be structured so as to eliminate ‘empty riders’ which emit the most CO2 for the least economic gain?
Firstly, it should be said that hauliers do not make money driving around empty. Secondly, why should we charge road freight transport operators, who do not even decide how goods are loaded? Is that really a sensible approach? Generally, those decisions are taken by our clients, the shippers and the forwarders, and it’s up to us to respond to these demands within the limits of the regulatory framework. I think creating a legal framework of joint liability for both the shipper and forwarder would better contribute to more rational decisions concerning the load ratio of trucks.
More broadly, how can the EU’s Eurotoll proposals be structured in a way that is fair to the auto industry, without incentivising more carbon-emitting road transport – that already accounts for 12% of Europe’s emissions?
Well, first and foremost, and based on conservative figures from the European Environment Agency and the United Nations Framework Conference on Climate Change, commercial road transport only accounts for 3% of Europe’s total emission. A reminder is also needed that the European road freight industry has taken up its responsibilities and reduced fuel consumption and thereby its CO2 emissions by 36% compared to a decade ago in absolute terms.
We need to be careful here, because the purpose of the EU road infrastructure charging legislation is not to reduce the CO2 emissions of road users. Its main purpose is to cover costs relating to the use of road infrastructure and certain externalities like local air pollution and noise. Tackling CO2 emissions in road transport should be done through policies primarily aimed at reducing fuel consumption through more aerodynamic vehicle design, for example, encouraging the use of viable alternative fuels, diversifying energy use, and allowing larger capacity HGVs, such as the European Modular System, to operate wherever possible.
Moreover, there is a tremendous untapped potential for further reducing emissions in road transport by supporting and promoting, including via tax incentives, the use of buses, coaches and taxis. The EU/Smart Move public-private High Level Group has recently estimated that doubling the use of collective road transport would cut 40-50 million tonnes of CO2 every year in the EU alone, at the lowest cost to European taxpayers.
Environmentalists often say they are worried that megatrucks would allow a situation where, for example, shrimp might be transported from northern Europe to Morocco to be peeled, before being transported back to northern Europe again. Wouldn’t cross-border use of mega trucks incentivise that sort of arrangement?
The ‘European Modular’ Concept offers better transport, not more road transport. It’s the best way to promote co-modality, which is why environmentalists should not worry about it, but rather support it! If we want to achieve the resource-efficient and sustainable transport system that Commission Vice-President Siim Kallas outlined in his 2011 White Paper, all transport modes will be needed. The Commission itself asserts that road transport will continue to play an instrumental role in such a network. Considering this, it is even more important to encourage road transport to green at source and to innovate. EMS is part of this innovation process and has been discussed extensively within the IRU.
We are willing to talk to the combined transport community to see how we can cooperate in ensuring the best possible solutions for combined transport as well. But unfortunately it seems they are unwilling to co-operate and instead follow old ways that have proven not to work as combined transport in the EU today only represent 1,78% of inland transport. If we want to keep serving the EU economy and citizens, innovation in road transport must be encouraged, as it seems that rail remains unwilling to change and thus will remain unreliable.
As for the shrimps’ story, we could lose sight of the fact that road transport drives progress and prosperity in every region of the world. Trade happens because of price differences. If we say no to trade, we say no to development.
If you want cheaper charging for trucks and vans, most literature reviews show that will increase the volume of traffic, and thus carbon emissions, don’t they?
Again, if the objective of making road freight transport more expensive is to support a modal shift policy to so-called cleaner transport modes, this policy is bound to fail, simply because more than 70% of goods transported by road are not price-sensitive. Switzerland is the perfect case study: they have some of the most expensive charging rates in Europe and yet have not achieved any of their forced modal shift targets!
The recent economic crisis has definitively showed us that economic growth and transport demand cannot be decoupled. Increased road transport demand will inevitably lead to faster fleet renewal and cleaner road transport. In this sense, every penalty on road transport is an even greater penalty on the economy and the environment as a whole. Further charging, without real business incentives to expedite the acquisition of cleaner vehicles, is therefore not the solution to make commercial road transport greener. We could moreover argue that making EU road freight transport more expensive will severely harm Europe’s competitiveness and cause further delocalisation, which in turn will generate more road transport from abroad!
Do mega trucks necessarily increase the severity of road accidents in which they are involved?
Several official government reports on the use of and trials with the European Modular System have not identified any additional road safety hazard relating to the use of these combinations, and have concluded that there is no negative impact on road safety. These “mega” trucks, as you call them, or “greener trucks”, as I would like to call them, actually perform much better than conventional trucks when we look at breaking performance, since the weight per axle is distributed much better.
How would you respond to those who call for 100% coverage of roads in the EU’s toll proposals?
Again, the road freight transport industry is willing to pay its way and willing to internalise externalities, but it must be done in a fair, transparent and non-discriminatory way without double taxation or charging, without increasing the general fiscal burden on the sector and with obligatory earmarking of revenues to road transport projects, which will contribute to greening road transport at source. The priority must be to make road freight transport more sustainable, not more expensive. So, no cross-subsidising of railways - which should also cover their own infrastructure costs and externalities in the first place, as all transport modes should do.
Should money raised from toll roads – which are effectively carbon charges – be used to further reduce CO2 emissions?
Reducing CO2 emissions is not the first objective of the EU legislation on road infrastructure charging. However, obligatory earmarking of revenues to road transport projects aimed at greening the sector at source can indeed contribute to reducing fuel consumption and CO2 emissions. Eco-driving training, R&D in vehicle design, promotion of collective passenger transport by buses, coaches and taxis, further development of alternative fuels and their infrastructure for commercial road transport could all have a very positive impact. All we need is political will and the legal framework to support this!
You argue that a greater use of megatrucks would not necessarily hurt the rail industry. Why do you think they are not convinced?
A resource-efficient sustainable transport system will need all transport modes, including rail. The IRU is calling for an efficient rail and combined-transport sector for capacity reasons, but efficiency policies should not be detrimental to the road freight sector. Regretably, the railways are delaying progress and innovation in all other modes. They refuse to see the advantages of progress and innovation, such as the use of EMS in combined transport. What better way to increase the efficiency of combined transport than bringing two instead of one containers or swap bodies to the train terminal?
Unfortunately, rail is not doing anything constructive with the competitive advantages they receive, nor with the massive public funding and political support. They cannot meet the service required by modern economies and as such are diversifying their activities into other modes, including road freight transport where, in some countries like France and Germany, they have become the largest road transport operators. Don’t misunderstand me, there is nothing wrong with such diversification, but it should not be with public money which then creates unfair competitors and it should not delay progress and innovation in this sector!