DG MOVE’s Christos Economou on the EU’s vision for road transport

Christos Economou, Deputy Head of Unit dealing with land transport within the European Commission’s DG MOVE, describes a new framework for road charging in Europe to Jason Barnes.

Within the European Union (EU), two Directives shape the legislative framework on road charging. Directive 1999/62/EC sets up a number of rules to make sure that national road charging schemes do not distort competition on the internal market or discriminate between hauliers. It is misleadingly called ‘Eurovignette’ after the common road charging system applied by Sweden, Denmark, the Netherlands, Belgium and Luxembourg. In truth, the core of the legislation is dedicated to distance-based charges, and the name ‘5809 Eurotoll’ would suit it much better.

Directive 2004/52/EC – or the ‘EETS’ Directive – required the market to realise, by October 2012, a European Electronic Tolling Service (EETS) which would allow Heavy Goods Vehicles (HGVs) to use all electronically tolled roads in the EU under one contract and using a single on-board unit. The 2012 deadline for the operation of EETS was missed and the European Parliament and European Commission (EC) have tried to instil a new sense of urgency into the industry and EU Member States in order to make this initiative a reality.

Directive 1999/62/EC was last revised in 2011. The amendment was motivated by the need to reduce the external costs of transport, says Christos Economou, Deputy Head of Unit dealing with land transport, 5578 DG Move. However the economic crisis which occurred shortly after the EC originally made its proposal in 2008 considerably changed the deal by putting the need to promote growth and employment in the heart of any policy work.

“In the field of road charging, this meant refocusing on issues such as ensuring the preservation of Europe’s dense transport networks – one of our greatest assets in terms of global competitiveness – and reducing road congestion.

“Public spending on transport infrastructure in relation to GDP has decreased in the EU by 50% in 30 years. The nominal pace of growth in transport budgets decoupled from the increase in transport investment needs a decade or two ago. But the drastic cuts in budgetary expenses introduced by many Member States after 2008 fully exposed the structural inability of public authorities to support alone the maintenance of transport infrastructures.”

An illustration of this is provided by the findings of a special commission established by German regional transport ministers to analyse the issue. It revealed that the country’s transport networks have been losing in value, for the last 15 years, €4.5 billion every year because of insufficient funding for maintenance. These developments are even more alarming as Germany is far from being the country in the EU most people would associate poor-quality transport infrastructure and acute budgetary constraints; things are much worse in most other Member States.

Congestion, Economou notes, costs the European society the equivalent of between 1% and 2% of GDP – in other words, more than the EU budget.

“If we continue on current trends, congestion will literally asphyxiate our economies in a not-so-distant future,” he says.

New legislation on the horizon?

With these considerations in mind, in August last year the EC launched a public consultation on elements of a possible new legislation on road charging. A wide majority of respondents agreed with the Commission’s diagnoses on the state of infrastructures and the social costs of congestion. The consultation also showed strong support for road tolling as the fairest and most efficient tool with which to address these problems. Respondents to the consultation called upon the EU to come up with more operational solutions to foster the development of an EETS.

Economou: “Living up to the identified challenges will require considerable changes to the legislation. Deployment of new tolling schemes needs to become less burdensome for Member States but coherence and interoperability of tolls must increase. Current rules on congestion charging must be reviewed because they are blatantly ineffective. And finally, as users rather than taxpayers are increasingly called upon to pay for the infrastructure they use, legislation must make sure that this happens in a fully transparent and non-discriminatory manner.

“New road charging schemes will not help bridge the funding gap in the maintenance of the infrastructure unless an appropriate proportion of revenues from tolls and vignettes is earmarked to the transport sector. This condition is also crucial from the point of view of fairness and effectiveness.

“The Commission might present its proposal in autumn this year. Whilst we cannot prejudge the content of a legislative proposal before it has been formally adopted by the Commission, we can nevertheless present some of the measures being considered in the preparatory work.”

Phasing out HGV vignettes

Time-based charges – vignettes – are a crude tool and a missed opportunity to charge road users for the true costs they generate, as most of the infrastructure and external costs in road transport are distance related.

“The natural tendency observed in the Member States is therefore a move away from HGV vignettes and towards distance-based charges. The most recent examples include Poland, Slovakia and the Czech Republic, with Belgium and Hungary likely to follow in the near future,” Economou continues. “The role of the EU should be to accompany the other Member States in the passage from vignettes to fair and efficient tolls for HGVs, possibly setting up a date in the future after which tolls will become the only legal way of charging lorries for the use of roads.”

Congestion charging

The idea of genuine congestion charging was abandoned in the final compromise reached by the co-legislators in 2011. Current legislation does not apply to cars and vans, which are responsible for some 80% of traffic jams. It comes as no surprise therefore that, so far, the uptake of congestion charging on Europe’s trunk roads has been minimal. An amendment of the legislation is necessary to change this current uptake level.

“The perception of what constitutes unacceptable congestion is subjective,” Economou notes. “Each Member State or even regional authority should have full discretion in deciding where congestion charging can help solve problems caused by excessive rush hour traffic, and where other measures such as implementation of ITS solutions will be more appropriate. It would go against the very principle of subsidiarity if the EU imposed congestion charging schemes that have a clearly local dimension.”

Making the Directive more “user friendly”

Directive 1999/62/EC is an enormously complex piece of legislation. It imposes heavy administrative requirements upon Member States wishing to deploy road tolls, which can constitute a disincentive to act. At the same time, the Directive provides for exemptions (such as for existing concession contracts) and exceptions which contribute to a patchwork of inconsistent arrangements across the EU. It may not be possible to abandon all notification requirements for Member States, and some of the exceptions are perhaps justified. However, the specific provisions of the Directive must be screened in search of simplification.

More transparency, better protection

“Since 2004, the EU has developed a fairly complete body of legislation protecting passenger rights. The only mode of transport where passengers do not benefit from any rights guaranteed by law is personal road mobility. In a Communication adopted in 2012, the EC depicted how motorists are discriminated by existing national vignette schemes which apply to passenger cars. Further research showed that tolling schemes can also violate the rights of the users through abuse of the dominant position or discriminatory practices,” Economou continues.

“It is crucial that wider application of the ‘user pays’ principle does not happen to the detriment of the basic rights of citizens. As a first step, the EU should guarantee that users are not discriminated against on grounds of nationality and that they have a fully transparent insight into the structure and the rationale behind charging schemes.”

ETC interoperability

The nine years which elapsed since the adoption of the ‘EETS Directive’ did not take Europe any closer to an EETS realisation. In reality, many new electronic tolling schemes appeared but only few, limited interoperability agreements followed.

“The result is a lot of redundant costs and administrative burden for hauliers, estimated at some €300 million per year. These costs will increase in the future as ETC deployments mushroom within the EU and in neighbouring countries. In a couple of years, there might be as many as 23 different electronic tolling systems in wider Europe,” Economou says.

“The market-based approach to EETS, which was followed by Directive 2004/52/EC, has not yielded the expected results. The European Parliament has recently called for regulatory measures to enforce interoperability into existing and future electronic tolling schemes.”

Long-term vision

“The upcoming proposal is part of a strategy to restructure the way in which we pay for mobility and transport. There is a need to move away, in a stepwise approach, from distortionary taxes and subsidies and to replace them with fair and efficient pricing.

In the long term, distance-based charging, varying according to the time and place of use and the vehicle characteristics, should become the norm, both for HGVs and for other vehicles. The revenues from the charges will need to be channelled to the maintenance of transport infrastructure and transport-related projects leading to an efficient and economically viable transport network.”