Geographies in Depth

How 'road pricing' can support the EU’s Green Deal

A traffic jam forms on a road.

The path for reversing a car-centric urban space is challenging. Image: REUTERS

Maya Ben Dror
Industry Manager, Automotive and New Mobility & Advanced Manufacturing, World Economic Forum Geneva
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  • In April 2021, European Union policy makers reached an agreement to achieve a climate-neutral EU by 2050.
  • They agreed to reduce emissions by at least 55% by 2030, compared to 1990 levels.
  • To help meet these targets, the EU should issue specific guidelines for road pricing, writes World Economic Forum's mobility chief, Maya Ben Dror.
  • Effective road pricing policies can drive significant, positive impact in cities by reducing congestion, climate emissions and local air pollutants.

In April, EU policy makers reached a provisional agreement for an EU climate law to achieve a climate-neutral EU by 2050 with a collective net greenhouse gas emissions reduction target of at least 55% by 2030 compared to 1990.

One of the strategies to achieve this goal will explore urban mobility, with a specific EU initiative under preparation for a launch by the end of this year. The European Commission has also adopted an open process to building out its urban access regulation, where sustainable mobility pathways are researched and piloted through 2022.

As part of these efforts, the EU should set out progressive policies to support local areas in facing new mobility challenges. One way to do so is by issuing specific guidelines for road pricing.

The benefits of road pricing

Motorists have never properly paid the social costs of private motoring. Effective pricing policies can drive significant, positive impact in cities by reducing congestion, climate emissions and local air pollutants, and increasing the use of transit and active modes of transportation. Citizens and visitors would breathe cleaner air, not lose time in transit and experience an improved quality of life.

Additionally, governments around the world are already facing the issue of declining gas tax revenue, and in many places, are already exploring alternatives. While revenue generation is secondary to congestion management, the primary goal of any road pricing policy, it does emphasize the need to rethink policies around the regulatory cost for mobility choices.

The opportunity to address road transport hazardous emissions and incentivise shared rides and multi-modal mobility can also bring a city one step further towards an inclusive, equitable and clean mobility for all. Singapore, London, Stockholm and Milan have already adopted the policy, New York City and the state of Israel are drafting central district tolling policies, and cities such as Seattle and Los Angeles are considering new road pricing policies. European cities must not miss out on the competitive advantage that fair and efficient pricing of mobility can offer.

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The path to effective road pricing

The path for reversing a car-centric urban space is challenging yet rewarding. It is important to design road pricing policies carefully to enhance the environmental and societal benefits and take full advantage of emerging new mobility technologies. Road pricing policies in urban areas can take several forms, and EU initiatives in this field should support cities to design the methods that best fit the local context.

The EU should issue guidance for member states on shaping their road pricing policies to align with their broader resilient mobility strategies, as well as show how to best implement it efficiently and effectively. Here are five issues that can make sure road pricing approaches are the most effective.

First, ensure that policy is serving the long-term vision for mobility. Its design should reflect key mobility principles established by the city. For example, the Shared Mobility Principles, adopted by cities and transport agencies around the world, include prioritization of people over vehicles, the promotion of equity and engagement with stakeholders. Many EU cities have prepared sustainable urban mobility plans that bring together a multi-modal, sustainable view on the city.

Second, implement road pricing policies that establish a level playing field on which all vehicles are charged for the roads they use and the emissions they create. The system should be designed specifically to discourage undesirable mobility trends, charging for actual time and distance on the road, and dynamically altering that for different places and different times. Policies designed with this in mind have a better chance at delivering tangible, hyperlocal impact on congestion. Charging fair fees to all types of vehicles is also critical, as policies that exempt large numbers of vehicles incentivize more travel.

Third, road pricing schemes should reward higher-occupancy trips and lower emissions mobility. Intrinsically, higher occupancy trips are automatically rewarded as the marginal cost for road use is split among riders, but where possible, carve-outs for low emission and shared vehicles should be explored. Offering multiplied incentives to those modes that increase seat occupancy - especially technology enabled platforms that can pool parties - can also help spur market innovation for sustained, future higher occupancy mobility. Similarly, extending outsized incentives, or fee waivers, for ultra-low (e.g. high fuel economy hybrids) and zero-tailpipe emission (e.g. full battery electric or hydrogen fuel cell) vehicles in the early years of implementation rewards market innovations that drive sustainable mobility. Taken together, these shifts can increase the options for high efficiency modes on an emissions per passenger and kilometer basis.


What is the Forum doing to help cities to reach a net-zero carbon future?

Fourth, funds collected through the policy should be channeled toward infrastructure improvements supporting high efficiency, shared and active modes of mobility. These funds should support “first/last mile” services, shared active and micro-mobility (such as walking, bikes, scooters, and mopeds), urban fast-charging for shared use EVs, micro transit including shuttles and pooled on-demand services. First-mile options play a critical role in commuters’ ability to access transit and leave their cars at home and should be diverse and cater for different needs. Should commute modes have reasonable availability of fast charging at key locations, first and last mile commute can be zero tailpipe emissions.

Fifth, any road pricing program should feature strategies to improve equity in transportation.

Transportation equity implies that all communities – including low-income, communities of color, immigrant communities, or individuals with disabilities – have adequate access to affordable transportation options and are not disproportionately affected by new transportation investments.

Transportation equity is an ongoing problem, especially as the proximity of jobs to high-poverty communities has declined rapidly since 2000.

To promote equitable outcomes, the program should: engage community members, especially vulnerable populations, in the process of developing a road pricing program; offer affordable alternatives or consider credit provisions within the charging system for qualifying vulnerable populations, such as free or discounted transponders and caps, discounts or exemptions for tolls; and use program revenues to improve transit service and bicycle and pedestrian networks, prioritizing routes in marginalized communities.

Post COVID-19 recovery is shaping up to be a transitional moment of the mobility landscape. If designed right, road pricing can place cities on the path to clean and equitable human-centric mobility systems.

Members of the World Economic Forum’s Global New Mobility Coalition’s Zero Emissions Urban Fleets (ZEUF) concept note to the European policy makers. ZEUF is a network of stakeholders for accelerating urban fleets electrification, targeting 100% by 2030.

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Related topics:
Geographies in DepthClimate ActionUrban Transformation
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