ROAD INFRASTRUCTURE FINANCING AT EU LEVEL: SOME CONSIDERATIONS

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1 ROAD INFRASTRUCTURE FINANCING AT EU LEVEL: SOME CONSIDERATIONS Christophe Nicodème Director General - ERF 1

2 1.000 delegates to gather in Lisbon How to finance our Roads? 2

3 THE ROADS ARE AN ASSET (1) Backbone of the economy Social equity Socio-economic wealth for citizens Access and Mobility for goods and persons 3

4 THE ROADS ARE AN ASSET (2) SOME FIGURES (EU): Road Network: some 5,5 million km Replacement value: over 8 trillion * Goods inland transport: 72,5 % Passenger inland transport: 83,2 % Contribution to EU economy: 14 million people 11% of the EU GDP * ERF RAM WG estimate based on average reconstruction value 4

5 THE ROAD INFRASTRUCTURE EU: 5.5 MILLION KM Great disparity within EU countries Mature road network Inadapted / inefficient road network Insufficient road network 5

6 THE ROAD INFRASTRUCTURE Management requires a systematic approach Planning & design Building Replacing Operating Upgrading Maintaining A decent allocation of funds! 6

7 THE ROAD INFRASTRUCTURE Lack of Management has impact on: Mobility Safety Environment Economy Value of the asset 7

8 Traditional delegates to gather in Lisbon FINANCING METHODS Public expenditure (National, EU taxes) Concessions (tolls shadow tolls PPP schemes) Vignettes (Eurovignette, other vignettes) User charging (pay-per-use principle) 8

9 ROAD FINANCING SOME EXAMPLES 9

10 1.000 delegates to gather in Lisbon Public Expenditure Huge public building expenditures in the past BUT High level of taxes (registration, insurance, circulation, fuel ) Current economic constraints and uncertainty Budget restrictions and orthodoxy Systematic lack of investment for preservation and maintenance Since years! 10

11 1.000 delegates to gather in Lisbon DIFFERENT SITUATIONS IN EU With or without toll motorways / highways Where toll roads Highest level of safety Highest service to user Principle accepted: pay per use service in return 11

12 Road Financing TEN T State of Play HGV 12

13 Road Financing TEN T State of Play Private cars 13

14 1.000 delegates to gather in Lisbon CURRENT SITUATION Road user charging: principle generally accepted for motorways However: TEN-T accounts for only 65,000 KM The vast majority of EU roads are financed by national taxes! 14

15 1.000 delegates to gather in Lisbon CHRONIC UNDERFUNDING OF ROADS Investment in transport infrastructure at all time low 1,5 % GDP in 1970 s * 0,8 % GDP between * * OECD Figures 15

16 ROAD FINANCING ROAD CHARGING / ROAD PRICING 16

17 1.000 delegates to gather in Lisbon The so-called Eurovignette Directive Long and complex process Directive 1999/62/EC Directive 2006/38/EC Directive 2011/76/EU for Road Infrastructure Charging 2 years for transposition in MS legislation 17

18 1.000 delegates to gather in Lisbon Eurovignette - Principles Fair charging for use of the road infrastructure For HGVs Polluter pays principle Optimisation of use of existing roads Reduction of negative impact Avoid double taxation or additional burden to users 18

19 1.000 delegates to gather in Lisbon Eurovignette Results (1) Many variations (levels, network, vehicles) Pollution and noise added to the use Congestion not included Many exemptions Possible mark-ups Limited and not mandatory EARMARKING 19

20 1.000 delegates to gather in Lisbon Eurovignette Results (2) Applies to commercial road transport No removal of externalities (noise/pollution) Pure political compromise (too many differences) An extra tax on road transport Earmarking limited and not mandatory Earmarking for transport in general (not specifically road) No improvement of the road infrastructure 20

21 1.000 delegates to gather in Lisbon ROAD PRICING Challenges: Political (sensitive issue perception burden) Socio-economic (congestion no or few alternatives) Legal (charging systems issues about privacy) Technological (costs accuracy deployment timing) EC Consultation launch: December 2012 Proposal expected September 2013 (?) Probable shift to distance-based charges as from January

22 1.000 delegates to gather in Lisbon ROAD PRICING THE ERF POSITION ERF Position Paper Earmarking of revenues Maintenance, Upgrade, Improvement Revenue Neutrality No additional charge, compensation, need for growth Fairness and Proportionality Distance based, for all users, no abuses 22

23 1.000 delegates to gather in Lisbon ROAD PRICING SUMMARY RUC MUST BE FAIR RUC NEEDS TO RECOGNISE THE SOCIO- ECONOMIC IMPORTANCE OF ROADS RUC MUST NOT BE AN ADDITIONAL TAX RUC REQUIRES CANCELLATION OF SOME EXISTING TAXES REVENUES MUST BE EARMARKED IF YOU PAY, YOU MUST GET A CORRECT SERVICE IN RETURN 23

24 ROAD FINANCING ALTERNATIVE SOLUTION The Spanish Mobility Bonus Example (AEC) 24

25 Bono de Movilidad (Mobility Bonus) Strong development in the 80s and 90s (EU funds) Lack of maintenance for years Accumulated deficits Proposal Financing proposal for the whole road infrastructure (non motorway) Recover deficits Improve quality and service to user Improve mobility 25

26 An additional tax A Eurovignette The ultimate solution What it is not: What it is: An innovative and original approach A consistent option An integrative model 26

27 AEC s Proposal (1) Linked to the over-use of the network beyond determined medium standards Fee over minimum mileage: between 0,075 and 0,12 per km Variable criteria: Time (peak hour, night ) Cost Service level Road Types 27

28 AEC s Proposal (2) Via OBU linked to a bank account Free circulation allowance For all vehicles On the whole road network (except Motorways) Until a certain mileage km/year for vehicles < 3,5 T km/year for vehicles > 3,5 T 28

29 Objectives Cancel deficits in road infrastructure budget Invest for all networks, with social and territorial criteria Improve information and service to road user Improve traffic flow and mobility Improve infrastructure and equipment (safety, sustainability) 29

30 Considerations Social acceptance > < service in return Global application to avoid shifting effect Minimum standards included in budgets Surplus to eliminate deficits and improve infrastructure Management Agency required 30

31 Financial Estimation GLOBAL REVENUE: 20 Billion / year MANAGEMENT COSTS (Agency): 1 Billion / year OBU COST: approx. 50 / unit 31

32 USER COST ESTIMATION Example 1: Passenger car km / year 5000 km extra approx. 375 / year Example 2: HGV km / year km extra approx / year 32

33 MOBILITY BONUS SUMMARY Private initiative Innovative and original approach Integrative approach Intelligent earmarking approach Food for thought 33

34 1.000 delegates to gather in Lisbon THANK YOU FOR YOUR ATTENTION EUROPEAN UNION ROAD FEDERATION (ERF) Place Stéphanie, 6 / B B-1050 BRUSSELS 34