Proposals adopted by the Commission yesterday (8 July) could see road haulage costs rise even further than they have already as a result of the hike in fuel prices. They aim to reduce the sector’s negative impact on the environment, although green groups say the plans remain weak.
The Commission’s much-anticipated ‘Greening Transport’ package contains a raft of measures aimed at steering transport towards more sustainability.
A key element is a plan to revise the Eurovignette Directive to enable governments to impose tolls on lorries that better reflect their real cost to society, including environmental damage and congestion (EURACTIV 06/07/08).
According to the Commission, the average extra cost per kilometre for a relatively clean truck would be 4-5 eurocents – an amount which would “vary widely” – according to the road section, the vehicle’s pollution class and the time period – but which the EU executive insists will not increase prices of goods in the shops.
Road haulage represents just one part of transport costs, which in turn represent only 1-9% of final product values, stresses the Commission. What’s more, because “changes in toll structure will not take place until 2011 at the earliest and will be fully predictable by firms which will anticipate them and adapt their behaviour, any upward impact on price of goods in the shops in the short-term is likely to be insignificant, if noticeable at all. In the medium-term, the impact on prices should be downwards,” adds the EU executive in a presentation of its new legislative plans.
But the haulage sector strongly contests the Commission’s reasoning. Pointing to studies that show that even a €1 per km road toll increase would only lead to a less than 1.22% shift of road transport volume to rail, Bertil Dahlin, president of the International Road Union‘s Goods Transport Liaison Committee, stressed: “The Eurovignette Directive will only make the EU less competitive, and is likely to cause even further delocalisation which will, in turn, generate more road transport from abroad! This ‘polluter-pays’ approach simply moves the problem elsewhere instead of solving it on spot!”
The freight industry is supported by retailers, wholesalers and international traders, represented by Eurocommerce, which has urged caution as “extra charges on road transport modes will not result in a shift to other modes but simply in an increase of costs”. It adds that more expensive transport can create “substantial” adjustment costs for the economy, in terms of employment and regional development, particularly when no alternatives are available.
But green NGO Transport & Environment contests these statements, pointing to Switzerland as a successful example for charging road freight operators for the environmental and health impacts of their journeys.
The scheme started in 2001 and, according to T&E, after seven years, it has led to an increase in the efficiency of road transport, highlighted by a 6.4% decrease in the number of kilometres travelled by heavy goods traffic with a simultaneous 16.4% increase in the volume of goods transported.
Emissions of particles have also been cut by 10% and nitrogen oxides by 14%. The effect on consumer prices has been “negligeable”, with an “overall attributable price increase following the introduction of the scheme” of just 0.1%, while the number of people employed in road transport remained stable, says the NGO. What’s more, highlights T&E, during this time, “Switzerland climbed the global competitiveness rankings to be ranked as the most competitive economy in the world in 2006-2007, according to the World Economic Forum”.
Struggling to cope with fuel prices
But the IRU’s Dahlin further notes that timing could not be worse as dramatic price hikes in fuel over the last two years, “due to rising oil prices and burdensome taxation accounting for up to 56% of the price at the pump,” continue to have a devastating impact on road transport operators. “The European Commission is now proposing another cost driver: additional infrastructure charging! This new fiscal penalty imposed on road transport will simply constitute an even greater penalty for the economy as a whole,” he concluded.
IRU members are in fact calling upon governments and the EU to reduce what they say is already a heavy fiscal burden imposed on road transport operators by introducing a single professional fuel duty for all commercial transport industries, including road, air, rail and maritime transport, which would be “significantly below the current minimum duty”.
But the Commission says the high fuel price “should not be used as a pretext to postpone initiatives to prepare the ground for a more sustainable transport system. On the contrary, it is a further reason to accelerate the adaptation of our transport system and reduce its dependency on fossil fuels”.
It further adds that its initiative will, in the long term, benefit the road freight sector by creating efficiency gains, thanks to less congestion on busy roads and a more efficient use of energy.
A CO2 fuel tax?
While the Commission claims to have a strong hand with the road industry, it has decided not to make it pay for the costs to the environment caused by the sector’s CO2 emissions through tolls – despite the fact that they represent roughly 20% of total EU CO2 emissions.
The Commission defends this stance, saying it intends to deal with the problem via a review of its Energy Taxation Directive, where a CO2 element would be included in fuel taxation.
But the rail sector has dismissed this idea as “purely theoretical” and “completely lacking credibility and realism” in current times of rising oil prices.
“With climate change considered as the number one challenge by the Commission, we do not understand why two external cost categories – namely CO2 emissions and accidents – are excluded from the proposal,” says CER Executive Director Johannes Ludewig, in a joint statement with EIM and UNIFE, which represent railways and rail infrastructure companies.
Rail sector told to cut noise in half
Other proposals in the Commission’s green transport package include plans to reduce noise emissions from rail, which it says represent “one of the most widespread public health threats in industrialised countries…with about 10% of the population exposed to noise levels above the threshold for ‘serious annoyance’.”
Under the foreseen rules, all wagons with a remaining lifetime of at least five years would have to be equipped with low-noise brakes by 2014. What’s more, railways using silent wagons rather than noisy ones would have to pay fewer track access charges, while daily noise emission ceilings would be set along certain lines to avoid noise levels rising as rail traffic increases.
Where the money goes
The Commission wants revenues generated by external cost charges be earmarked towards improving CO2 and energy performance of vehicles and developing alternative infrastructure for transport users.
The International Association of Public Transport (UITP) has welcomed this as they have long been asking for increased funds to promote public transport as “a very effective strategy to reduce oil dependency, greenhouse gas emissions, congestion, road accidents, as well as local pollutants”. But IRU and Eurocommerce are opposed to cross-subsidising, saying road infrastructure is scarce enough as it is.
The EU's first attempt to address the wide range of negative 'external effects' produced by transport was in 1993, when it put forward a directive enabling countries to introduce tolls on motorways in order to finance the cost of infrastructure deterioration caused by heavy road vehicles.
Known as the 'Eurovignette Directive', the law was revised in 2006 with a view to extending its scope to more roads and vehicles and making it possible for governments to integrate other costs – such as congestion, accidents, noise and air pollution – into toll prices (see our LinksDossier on Eurovignette).
However, due to strong disagreements between member states and Parliament, the final text of the Eurovignette de facto excluded this very possibility until a "common methodology for the calculation and internalisation of external costs that can be applied to all modes of transport" is agreed. The Commission had been due to present a model before 10 June 2008, but this date was postponed slightly due to the switch in commissioner portfolios, which saw the Italian Antonio Tajani take over from Frenchman Jacques Barrot in mid-June 2008.
A raft of other green measures for the future
The Commission has also announced its intention to come forward with the following initiatives before the end of its mandate in November 2009:
- A regulation on greenhouse gas emissions from new vans and minibuses;
- A Directive on Energy Labelling for tyres and a revision of existing Car CO2 Labelling Directive,;
- An action plan to support market entrance of Intelligent Transport Systems for road;
- A Green Paper reviewing the Trans-European Transport Network in light of the increasing importance of climate change;
- A revision of the Directive on Airport Noise, to increase the stringency for the types of aircraft that can be used;
- A revision of the Energy Taxation Directive, to ensure that it supports the EU's climate change and energy goals;
- A proposal to address nitrous oxide emissions from aviation;
- A proposal to include the maritime sector in the EU emissions trading scheme, if the International Maritime Organisation (IMO) has not made sufficient progress by then.
EU official documents
- Commission (press release):Greening Transport: new Commission package to drive the market towards sustainability(8 July 2008) [FR] [FR] [DE]
- Commission (memo):Greening Transport Package – Frequently asked questions(8 July 2008)
- Commission:Greening Transport Package
Business & Industry
- International Union of Public Transport (UITP):Internalisation of external costs
- International Road Transport Union (IRU):Detailed IRU observations on the recent EU proposal on internalising external costs
- International Road Transport Union (IRU):Resolution on the fuel price crisis
- CER, EIM, UNIFE:Greening Transport Package welcomed by the rail sector - but should be greener
- Eurocommerce:Position paper “consultation internalisation of external costs”
- International Road Transport Union:Greening of transport: CLECAT, ESC and the IRU assess the European Commission proposals(9 July 2008)
NGOs and Think-Tanks
- European Federation for Transport and Environment:T&E Reaction on the adoption of the 'Greener Transport Package' by the European Commission