Event-Based Pricing

July 2020

 

Introduction

The Mayor of London has sought to reduce emissions from motor vehicles in London and take significant steps to improve air quality.

Charges to Encourage Cleaner Vehicle Ownership

A number of London Boroughs are pursuing policies to reduce vehicles that contribute the most to poorer air quality. London Borough of Hackney’s resident parking permit has been priced based on CO₂ emissions since September 2016. CO₂ emissions-based charging was phased in over two years, with all residents and businesses paying half of the difference between their current permit price and the new charges in the first year. The full charges were then applied in September 2017. The London Borough of Croydon began differentiating residents’ permits based on emissions in the Autumn of 2019.

Combined with the higher Vehicle Excise Duty applied to vehicles with higher emissions, and generally higher fuel consumption, such policies are expected to encourage car owners to select low emissions vehicles when they are replaced. This policy may be complemented by charges that reflect the use of the vehicle, therein providing a combined financial lever to reduce the emissions the vehicle generates and reduce its use.

Both policies apply a single annual charge based on the type of vehicle. They provide a financial incentive to encourage ownership of greener vehicles. They don’t however create any deterrent for the use of the vehicle. It is the use of the vehicle that creates the pollution.

Charges to Encourage Reductions in Vehicle Use

Adoption of suitable emerging technologies presents the potential for each driving event to be identified and associated with a particular vehicle. This presents an option to introduce event-based charging measures. Vehicles that are used frequently can be expected to generate more absolute emissions and the other negative impacts of car-use in the Borough (congestion, severance, lost amenity and risk to vulnerable road users) than one that albeit with a higher carbon and particulates output, is used infrequently.

Variable Charges at the Destination

Some Boroughs have implemented variable tariffs for their on- and off-street parking based on the vehicle registration mark (VRM) associated with the parking event. The VRM provides engine size and fuel type such that the appropriate tariff and/or levy is selected[1]. 

These charges apply to those driving to a destination in the borough and using public car parking. It does not capture those trips made from those that live within the borough and drive to a destination that does not end in a public parking space. And this is important, because it is arguably the start of the trip that generates the most pollutants, and a car trip made by a resident that starts outside their home creates pollutants directly into the heart of the residential area.

A policy measure and mechanism that charges a vehicle each time it is driven from its origin would be consistent with looking to reduce car use, rather than ownership.

Variable Charges at the Origin

Technology to deliver such a solution already exists. Were the borough’s residential streets to be populated with in-highway parking sensors, potentially as part of a wider programme of kerb side management, there are opportunities for these to develop the way people behave and change the impact car use has on the environment. In-highway sensors with an added RFID capability can identify a unique RFID key within the vehicle. This concept has been trialled already in Westminster to confirm the validity of those parking in Disabled Bays. Where a sensor detects a parking spot is occupied, but the RFID reader in the sensor is not able to detect a valid Disabled Badge RFID, the necessary enforcement action can be invoked.^[2]   

In-highway sensor technology offers one solution for residents’ vehicles to be uniquely identifed within and for on-street parking within selected areas of a Borough.

Other solutions are emerging that may provide a far more cost-effective approach to providing individual vehicle locational positioning within given streets, including the use of RFID gates (mounted in street lamps) or wider systems linked to in-car GPS capability.

Enforcement is likely to still be required in all cases to ensure the system’s integrity. One such check will be to validate the correct use of tokens with the vehicle to which it is registered.

With the centralised reading of tags and vehicles that park being uniquely identified through the sensor system, charging could be levied in a way that is more integral and consistent with lower emission objectives. The system would levy a small charge for every night parked and a small rate for daytime use. This would reflect the prevailing policies to charge for the highway and could be graded based on the carbon-emissions associated with the vehicle to which it was registered. In addition, the system would detect each time the vehicle was removed from a parking spot, street or gated area for a significant period of time (such as a period of more than 5 minutes) and levy an event charge. This charge would again be based on the emissions of the vehicle and be a unit amount for every time the vehicle was effectively used. Event charges and standing charges would be combined to provide the total charge payable to that account.

Event-Based Charging for Residents

To encourage most residents to adopt the system there may be two further aspects. First, the notional purchase price of all current residential parking permits would be increased by a significant margin (such as 250%) but remain available at the current, discounted rate, for the following three-year commitment. Anyone using the tag process would not be charged more than had they purchased the equivalent annual parking permit at the discounted rate. However, those that accrue charges over the year that are less than the full parking permit charge would receive a rebate up to the cost of the discounted parking permit. Therein residents could only gain from the process. At best they could reduce their car parking and car use sufficiently to achieve free parking for the year.

The intention of the measure would be two-fold.

• First by applying individual night and day rates to parking, the scale of the low cost of parking being provided and managed on-street in the Borough for residents would become far more apparent, and begin to remove political and public support for residents’ on-street parking not to be charged more substantially.
• Second, it would link an event charge with every use of the vehicle, reminding users that every journey made through their neighbourhood creates pollution, noise, severance and presents a collision risk that is to the detriment of others.

Worked Example

To demonstrate, a resident with a medium sized car may be required to pay £163 for their annual permit under an established regime. With the tag system, the permit would have a full value of £407.50 (250%).

 

                          

Over the year, as a resident completes a number of events, an electronic charge is accumulated based on the three events:

Daytime Parking Charge

Night-time Parking Charge

Driving Charge

 

Figure 3

At the end of the year, the total event-based charges are combined and compared to the Permit Value.

Where the event charges exceed the Permit Value, no rebate is earnt. The resident is charged the Permit Charge (£163). No change

Where the event charges are less than the Permit Value, the absolute difference is applied as a rebate on the Permit Charge. The resident is charged LESS than the standard Permit Charge. Every additional stay and in particular every additional event would erode that saving.

 

The intent is that this would have a direct bearing on using the vehicle for discretionary trips and create a fundamental shift in driver thinking. 

As the overall permit cap increases, so the tag system could provide worthwhile incentives for residents to remove their vehicles for significant periods of time, perhaps parking them off street in other lower cost locations. This behaviour has been apparent in Toronto where downtown residents faced with significant parking costs use the free parking at the suburban railway stations to store their cars during the weekdays. At weekends they take the transit to the parking lot and pick up their car for a trip out of town (Metrolinx 2014). What this may then do is release on street parking capacity in the commercial areas of a borough so that it  can be utilised for visitor parking and to support the viability of the area for deliveries and customers. These casual parking users will pay a considerably higher rate for the parking spot than the resident is receiving as rebate from the council, potentially making good any shortfall arising from the tag process.

Event-Based Charging for Business Vehicles

For Business On-Street Parking permits the same argument and application can be applied. Businesses are charged for day-time duration and events. Thus, a vehicle used frequently by the business will incur a significant number of event charges (albeit these will be capped). Nonetheless this will indicate the impact that the business is having on the local environment. Where business permit vehicles are used by employees to travel into work, the tag process means that the cost of parking outside the workplace is not a sunk charge. Rather the tag process means that a decision not to use the car to go to work even on odd days will potentially save some money. That saving, albeit fairly small in actual cash terms, may well outweigh and sweeten the dis-benefits of using other modes (such as cycling on a fair day or taking the bus) and may have a psychological impact above its real value. This can be the stimulus to break habits and move habitual car users into those that begin to make an active choice.

The much higher fees associated with the business permits means that the impact of the potential savings for those using the tag process described are more significant, and provide a far greater incentive for business users to adapt their behaviour.

Concluding Remarks

The principle described is not dissimilar to the ideas behind Cash Back used by Pfizer in Kent. Here employees were offered an additional £2 per day which was deducted whenever they entered the staff car park. Those that didn’t drive, or drove less, enjoyed an increase in salary.

Event-based charging will not provide any direct reward for those that already make less polluting choices. It will however use funding to bring about an interim change in philosophy and pave the way for a charge regime that has greater integrity to the emission objectives and issues with motor vehicle use. This has significant benefits for all residents.

Andrew Potter

July 2020

[1] Since March 2019, the London Borough of Islington has applied an additional charge of £3 per hour to diesel vehicles. The City of London introduced variable charges at its Pay and Display bays based on the CO₂ emissions associated with the vehicle parked in August 2018. Other councils have already adopted, or approved such measures; Hounslow Council is set to introduce emissions-based parking charges for Pay and Display parking and business permits from 1st January 2021.

[2] Westminster City Council 2015, ITS international Feb 2016 pg 35.