Select Committee on Environmental Audit Written Evidence

Memorandum submitted by the Social Market Foundation

  1.  The Social Market Foundation welcomes this opportunity to provide our views on reducing road-transport emissions in the UK. The following comments have been prepared by Jeegar Kakkad, Economist.

  2.  Currently the SMF is conducting a major research project on road-user charging in the UK. We are using a programme of seminars and associated papers to pose three basic questions: what type of scheme is:

    (a)  technically and politically workable for the UK;

    (b)  gives appropriate priority to concerns about equity; and

    (c)  allows for significant contributions to reducing greenhouse emissions.

  3.  This brief will address what specific steps the DfT should take to reduce road transport carbon emissions and congestion over the next decade.


  4.  The current primary form of road-transport taxation in the UK, fuel tax has had success in inhibiting motoring, limiting growth in CO2 emissions and raising revenue. However, as traffic levels and congestion are predicted, even under the most optimistic of estimates, to worsen over the coming decades, the fuel duty is set to become increasingly unlikely to either cover the costs of, or inhibit, this additional motoring: the marginal social costs of congestion and carbon emissions can vary more than differences in fuel duty.

  5.  Specific to location, road-type, and time-of-day but largely independent of distance travelled, congestion is not homogenous. The nature of congestion depends on its location, with congestion on trunk roads differing from congestion on dense urban-road networks. The environmental costs of greenhouse gas emissions are incurred system wide, but also vary by speed, type of congestion and fuel efficiency.

  6.  For example, greater allocative efficiency, or the level of motoring optimal from society's point of view, on trunk roads and motorways implies increasing the straight-line traffic flows and speeds, which might increase the level of emissions on these roads.[82] In dense urban networks, such as London, much of the reduction in congestion and carbon emissions stem from reducing the queuing times at junctions.

  7.  Consequently, reducing congestion is not a sufficient condition for reducing either overall traffic levels or carbon emissions. Rather, by considering carbon emissions and congestion separately, we believe it is possible to understand where demand measurement techniques could be used to target reducing either carbon emissions or congestion, or the both together.


  8.  Since 1990, CO2 emissions by road transport have increased 8%. Although the growth in light-delivery vehicles (LDVs) and heavy-goods vehicles (HGVs) traffic has only accounted for 29.0% of the total growth in vehicle-kilometres since 1990, LDVs and HGVs have accounted for over 97.7% of the increase in road-transport CO2 emissions over the same period. In contrast, although the level of vehicle-kilometres driven by passenger cars since 1990 has risen 18.5%, their carbon emissions have only risen 2.1%.[83]

  9.  Looking forward to 2010, the DfT estimates an increase of 15-22% in passenger car traffic; a 19-20% increase in LGV traffic; and a 5-6% increase in HGV traffic.[84] Moreover, estimates show that carbon emissions from road transport are predicted to grow only slightly more slowly from 2005-15 than in the previous 10 years.[85]

  10.  We believe these statistics can be decomposed into two trends:

    (i)  the fuel tax has encouraged passenger cars to lower the fuel duty without necessarily reducing mileage, by switching to more efficient fuels, primarily diesel, which, on average, gets over 28% more miles per gallon than petrol.[86]

    (ii)  The increase in just-in-time and e-commerce deliveries has accelerated the growth of the number of and vehicles-kilometres travelled by LDVs, fostering increases in fuel consumption and carbon emissions.

  11.  Consequently, carbon emissions could be reduced if light and partly loaded truck travel was reduced, particularly for pick-up and delivery services. Trends suggest delivery-related traffic is on the increase, with just-in-time and e-commerce deliveries as primary drivers of this growth.[87] As light commercial vehicles generally travel with spare capacity—almost 40% of all van traffic in 2004 utilised only 0-25% of capacity—one objective for demand management should be to encourage better organisation and efficiency, which might allow this spare capacity to be utilised, thus reducing mileage and greenhouse gas emissions.[88]

  12.  One potential solution for lowering carbon emissions from both passenger cars and road freight is to increase the fuel duty. In addition to slowing the growth in traffic in the UK, one of the effects of the fuel tax has been for motorists to mitigate increases in fuel duty by switching to more efficient fuels. Indeed, since 1994, the consumption of petrol by cars and light goods vans dropped by 11% and 64%, respectively, while the consumption of diesel for cars and light goods vehicles more than doubled over that period.

  13.  However, Euro standards on fuel efficiency are such that although using diesel reduces CO2 emissions, it raises road transport NOx emissions, which have increased 472% since 1990: road-transport's share of overall NOx has risen from 1.8% in 1990 to 12.0% in 2003, even as total passenger car fuel consumption has remained relatively constant since 1994.[89]

  14.  As increases in the fuel duty are economically and politically untenable, other measures could facilitate increases in fuel efficiency (though not necessarily through increased consumption of diesel). Tax incentives, for example, to use hybrid passenger cars and delivery vehicles, and to develop and eventually consume alternative fuels could all reduce emissions. However, we would like to stress that reducing greenhouse gas emissions through such tax incentives lowers the cost of motoring and so could lead to increases in traffic levels and, therefore, potentially offsetting increases in greenhouse gas emissions.

  15.  Another solution could be to use a road-user charge that differentiates LDVs and HGVs from passenger cars. As the freight sector, however, has an inelastic demand for motoring, there are few modal alternatives for LDVs (and to a lesser extent HGVs). Consequently, one of the primary purposes of differentiated road pricing would be to decouple the taxation of freight haulage from passenger cars.

  16.  For example, the Swiss LSVA lorry charge is based on distance, weight and emissions class. By explicitly incorporating emissions and weight classes into the charge, the Swiss scheme was able to optimise freight and fleet management; to encourage consolidation and cooperation within the industry; and to improve allocative efficiency and thus lowering the trend in mileage for HGVs. Annual increases of 7% in HGV mileage in the years before the charge were followed by a 4% drop in 2001, a further 3% decline in 2002 and no change in 2003. Emissions of NOX, CO2 and PM10 are predicted to drop 6-8% by 2007.

  17.  A charging scheme aimed at reducing the traffic and greenhouse gas emissions of freight haulage would invariably differ from a scheme targeting congestion. The former would ideally include charging by distance, emissions class, and weight, while the latter would ideally charge by location, time-of-day, congestion levels, and road-type. All these various charges could be layered into a single scheme, but at the cost of added complexity for the motorist.

  18.  It is important to note, however, that road-user charging, either for passenger cars of for LDVs and HGVs, is more than likely a medium to long-term solution. Other pricing mechanisms, such as steeper gradations in the vehicle excise duty and tax incentives to use hybrid technologies and consume bio/alternative fuels could consequently be, especially over the next decade, as important as road pricing in encouraging more efficient uses of delivery infrastructures; a reconsidering of trip planning and transport patterns; enhancing bundling of consignments; and improving the efficiency of the transport business.


  19.  The considerable uncertainty over the economic and political feasibility of the fuel duty to capture the marginal external costs of motoring has left a role for road pricing in changing motorists' behaviour and raising revenue.

  20.  However, how local and national authorities propose to spend the revenues would be vital to how a road-user charge would impact on motorists' behaviour. By spending the revenue in ways that would affect the demand for motoring, such as financing public transport improvements or reducing the fuel duty, politicians would be more likely to change individuals' price sensitivity to the costs of motoring.

  21.  Road-user charging on a revenue neutral basis with reductions in the fuel duty could reduce congestion while taxing motorists in a more efficient way. However, reductions in congestion, especially on motorways and trunk-roads, may not translate directly into reductions in traffic and greenhouse gas emissions.

  22.  Consequently, a road-user charge that would primarily target congestion but that would also be economically and politically viable; give priority to concerns about equity; and enable reductions in greenhouse gas emissions would seem to favour significant levels of investment in complementary transport services, such as improvements to public transportation and road maintenance, management and capacity.


  23.  Over the next decade, we believe pricing measures, such as steeper gradations in vehicle excise duties and incentives to increase fuel efficiency, could help facilitate the changes necessary in the freight hauling and forwarding industries to reduce carbon emissions and curtail the growth in traffic.

  24.  In addition, investment over the next decade in measures complementary to road pricing, such as fostering the consolidation of the freight industry; investment in public transportation; and improved road maintenance, management and capacity, should play a central role in reducing road transport greenhouse gas emissions and congestion.

  25.  While road-user charges for passenger cars, LDVs and HGVs have a central in comprehensive demand management packages aimed at reducing overall traffic; greenhouse gas emissions and congestion, we believe road pricing across the UK is realistically 10-20 years away.

  26.  Although road pricing does have the ability reduce congestion and carbon emissions, we would like to stress that reducing congestion is not guaranteed to reduce greenhouse gas emissions. Nor is reducing carbon emissions at the expense of increasing other greenhouse gas emissions, such as NOX and PM10 an environmentally sustainable approach.

  27.  Rather we believe that the long-term strategies currently pursued by the DfT, such as the "Congestion TIF Schemes", can be bolstered by over the next decade by other demand management measures discussed in this brief.

February 2006

82,16518,1642044,00.html (14 November 2005). Back

83   DfT, Traffic Statistics Great Britian:2005 Edition, Defra, e-digest of Environmental Statistics (22 February 2006), and authors calculations. Back

84   IbidBack

85   Cambridge Econometrics, UK Energy-Environment-Economy, (2 February 2006). Back

86   Table 3.4, DfT, Transport Statistics of Great Britain: 2005Back

87   In 2004, the Department for Transport revised upwards growth estimates for light delivery vans. See also,, (13 February 2006). Back

88   DfT, Survey of Van Activity: 2004, 30 June 2005. Back

89   Table 3.1, DfT, Transport Statistics of Great Britain: 2005Back

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