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UK Think Tank Finds Tolling Can Ease the Shift to Electric, Autonomous Vehicles

By: 
Bill Cramer

One of the United Kingdom’s leading policy think tanks is pointing to tolling as a simple, positive way for transportation agencies to prepare for the growing impact of electric cars on gas tax revenue.

The plummeting cost of lithium-ion batteries and corresponding rise of Electric Vehicles has been a source of high anxiety for anyone responsible for highway transportation funding, and understandably so.

On one hand, the prospect of a faster transition off petroleum-based fuels is hard to oppose, with climate change quickly moving to the top of the global policy agenda.

But the United States is not the only jurisdiction where fuel taxes already fall far short of what’s needed to maintain and rebuild an aging highway network. And every new electric car on the road makes a looming crisis a little bit worse.

That’s why one of the recommendations in a recent paper from Policy Exchange, a London-based think tank, should be turning heads on both sides of the Atlantic. It calls on Westminster to “consider moving from the current taxing of drivers through fuel duty—a sales tax on petrol and diesel—to a system of road tolls and congestion charges to plug the gap.”

A Fork in the Road

The paper, issued in late June, delivers some shocking news, the Financial Times reports. The UK stands to lose up to £170 billion ($222 billion) in fuel duty revenues by 2030, after the country invests £600 million by 2020 to make itself a “global leader in self-driving vehicles and electric vehicles”.

Curiously, Policy Exchange points to a disconnect between two equally urgent policy objectives: the UK government expects fuel duty revenues to increase from £28 to £40 billion per year by 2030. But if that same government meets its same objectives for transforming the transportation sector, the Exchange says annual revenues could be £9 to £23 billion lower.

That’s a lot of necessary maintenance and repair, and it could all be at risk.

This is often the point where many jurisdictions begin looking to electric vehicle taxes or other surcharges, to recover the revenue they stand to lose when drivers make the switch. It’s an entirely understandable reaction, because the draw on highway revenue funds isn’t about to get any lighter.

But it creates a bit of a paradox. All but a handful of national governments around the world—and many hundreds of states, provinces, cities, and businesses—are committed to getting their greenhouse gas emissions under control. A highway revenue plan based on a rapidly-eroding fuel tax puts them in the position of encouraging a big change in driving habits with one hand while penalizing it with the other.

Enter Policy Exchange with the obvious, elegant solution.

Getting Ahead of the Problem

Placing tolling at the center of an integrated suite of climate solutions is an important step for transportation agencies everywhere, for reasons that go far beyond climate change itself.

To be sure, tolling and other highway infrastructure is on the front lines whenever heavy weather hits. And Superstorm Sandy was just an opening act for the storms, heat waves, and other climate impacts that are expected to make emergency events more frequent and severe.

But there’s a good news story here, as well.

Customers are flocking to electric cars, not primarily as a climate solution, but because they’re cool vehicles that people love to drive.

Transportation professionals, including many IBTTA members, are excited about connected and autonomous vehicles as an opportunity to optimize existing infrastructure and combat highway congestion—partly, but not primarily, to reduce tailpipe emissions.

What do all of these issues and opportunities have in common? They’re all enabled by the rapid transformation of transportation technology. And they all depend, one way or another, on a well-maintained, adequately-funded highway system.

As the Policy Exchange paper shows, there’s no reason we can’t have it all.

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