EU wades into transport pricing controversy

With less than eight months remaining before it must come up with a universal model to make users of all transport modes pay for the negative effects they inflict on society – including air pollution, CO2 emissions, accidents and congestion – the European Commission has invited stakeholders to take part in the controversial debate.

The Commission, on 30 October 2007, launched a two-month public consultation on the sensitive issue of internalising external costs related to transport, notably through the imposition of charges on infrastructure. 

The Commission points out that, despite being essential to Europe’s prosperity and competitiveness, transport activities produce a wide range of negative side effects, including infrastructure degradation, land use, air and noise pollution, greenhouse gas emissions and traffic accidents, costs which are not borne by the individual user but cost society as a whole a fortune. 

“For efficiency as well as for fairness purposes, the costs and nuisances related to transport activities should be borne to a large extent by those who produce them,” the EU executive states in its consultation document. 

A 2006 Council and Parliament directive on the use of transport infrastructure by heavy freight vehicles (known as the ‘Eurovignette Directive’ – see EURACTIV’s LinksDossier) calls on the Commission to bring an end to this unfair situation by presenting a general model for the calculation of all external costs related to transport and analysing the expected economic, social and environmental impact of their internalisation for all transport modes, by 10 June 2008 (two years after the directive’s entry into force). 

But many questions will have to be answered before any kind of uniform ‘user-pays’ system can be introduced for all forms of transport: 

• Should external costs be attributed to users, thereby causing an increase in transport prices? 
• Which type of market instrument should be used for which types of externality and transport mode – taxes, infrastructure charges or cap-and-trade schemes (already being planned to tackle aviation’s contribution to climate change – see LinksDossier on Aviation & ETS)? 
• Which costs should be considered to be transport-related externalities – just CO2 emissions and other pollutants, or also things like the hospital costs of people involved in road accidents or costs related to congestion, including time loss?
• What should be done with the money raised by internalising these costs – investment in new infrastructure or infrastructure improvements for the taxed mode of transport, or cross-subsidisation of more sustainable transport alternatives? 

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