What’s good for efficiency is good for the economy

Although the mid-term review is not yet published, two new studies have been, and they provide significant input into it. One is the latest EU Transport and Environment Reporting Mechanism (TERM) report administered by the European Environment Agency. The other is called “Assess”, a project of the Commission’s transport directorate which has been carried out by a consultancy based in Belgium, drawing on research from nine other research institutes across Europe – its report into the contribution of the trans-European networks and other transport policy measures to the Common Transport Policy runs to 1400 pages.

Transport efficiency

Given that one of the central aims of the Common Transport Policy white paper was to make Europe more transport-efficient and thus break the link between transport growth and economic growth (“decoupling”), what do these studies say about transport efficiency?

The TERM report shows up big differences in transport intensity among member states. What is particularly striking is that the countries that usually lead in all sorts of charts of economic success (Great Britain, Sweden, Finland) began as relatively transport-efficient and have become more so over the past decade. The countries that have more catching up to do are less transport-efficient. In other words, dynamic, knowledge-based economies – the mantra of the EU’s “Lisbon Strategy” – are transport efficient. Decoupling transport growth from economic growth – which is what transport efficiency is – does not harm the economy, it is a prerequisite for success, just like energy efficiency is.

Pricing

Both reports make it crystal clear that progress in effective transport charging has been disappointing. The summary of “Assess” says: “The biggest failure in the implementation of the white paper proposals is the failure to implement appropriate social marginal cost pricing for all transport modes, in order also to deal efficiently with the environmental issues.”

Beautifully said! Effective charging is an essential element in striving for a more sustainable and efficient transport system. And while it is too soon for the impact of the London and Stockholm congestion charges to be included in TERM’s transport efficiency figures, it’s surely no surprise that the capital cities of two of the most transport-efficient countries in Europe (indeed the world) have opted to tackle their city centre transport problems by way of charges for the most environmentally damaging forms of transport – with impressive results to date.

Yet EU promises to present a framework directive for internalising the external costs of transport have not been kept. All we have had is a flawed lorry-pricing directive, and the European Parliament has had to remind the Commission about its obligation to come forward with a methodology for internalisation. The Commission will have been left in no doubt by the road transport companies that pricing isn’t very popular with them, but it is the Commission’s job to look at the interest of Europe as a whole – fair and efficient pricing is an essential element of an economically sound and socially just European transport policy, regardless of what road interests and industries who have for years enjoyed artificially low transport costs might argue.

Infrastructure

Although the recently negotiated EU budget has less money for the trans-European transport networks’ priority projects than originally envisaged, the EU will still be paying several billion euros a year into the TEN-T through the structural and cohesion funds. The “Assess” report looks at the 2003 impact assessment of the TEN-T projects and says cryptically: “This represents an extremely interesting attempt to estimate and summarise the programme-level costs and benefits, and demonstrates how the benefits differ between the different scenarios examined. However, it does raise a number of questions, perhaps notably with regard to implied benefit/cost ratios.”

In plain English: the Commission’s own impact assessment shows that the TEN-Ts are bad value for money. This is illustrated by the figures showing that the travel time benefits are only 4% of the costs. The EU is in grave danger of wasting large amounts of taxpayers’ money on schemes that have not been properly thought through.

Though not a far-reaching document, the 2001 white paper did contain some useful policies. Yet even its modest promises have not been kept – and all the signs are that the Commission is further confusing the interests of the transport industry with the interests of Europe as a whole. If the Commission is serious about revitalising Europe as EU leaders said in Lisbon six years ago, it should avoid further watering down the already weak commitments of the 2001 transport white paper.

This news story is taken from the April 2006 edition of T&E Bulletin.