Road Pricing

Brussels quietly abandons revolutionary congestion pricing programme

2026-09-08T21:25:05.852+12:00

Background

Belgium is a federation of three highly autonomous regions. Since 2016 it has operated Viapass, a nationwide heavy-vehicle distance-, weight- and emissions-based road user charge for trucks over 3.5 tonnes. Viapass is run jointly by the three regions rather than the federal government; pricing and network coverage vary by region (all roads in Brussels; selected roads in Flanders and Wallonia). It replaced Belgium’s participation in the Eurovignette system, which charged trucks of 12 tonnes and over for time-based access to main highways across participating countries. Viapass is a great success. Six companies offer accounts and the necessary equipment for trucks using the charged network. It is mandatory for trucks registered in Belgium and all those visiting it. Brussels charges trucks more for using local roads compared to the motorways. The rate structure is here.

For light vehicles, distance-based charging has seen little progress. Fuel duty sits at €0.60 per litre. Registration fees remain high. Brussels attempted to change this with SmartMove, a pilot project designed to cut high annual vehicle registration fees and replace them with a distance-based charge that also varied by time of day and location within the Brussels Capital Region.

The aim was to shift taxation from ownership to use, cut congestion and emissions, and encourage modal shift.

I wrote back in 2020 about it and again in 2021. This was a system, piloted in 2021 designed to replace the high annual vehicle registration fees for light vehicles in Brussels, with a distance based charge, which would vary by time of day.

I said it was interesting for three reasons:

1. It is the latest attempt to introduce distance-based RUC for light-vehicles in Europe, replacing an existing tax. (Since then Iceland has done so, for all vehicles, but on a vehicle class basis distance fee, not one that varies by location and time of day)

2. It seeks to combine RUC with a form of congestion charging, by varying distance by time of day and location. The time of day factor is intended to charge higher rates for peak time travel, and the location factor being that only distance travelled within the Brussels Capital-Region would be subject to a fee.

3. Smartmove intends to pioneer using smartphones as a means of identifying and measuring vehicle trips. This has not been successful elsewhere to date, primarily because of the difficulties in ensuring that the phone is always linked to the vehicle, and the vehicle always has a smartphone operating to measure and report trip data.

The project had several key objectives. Reduction of congestion, reduction of emissions, encouraging modal shift and shift motor vehicle taxation from ownership to usage.

Deloitte led key elements: designing and building the smartphone app prototypes for large-scale testing; developing gamification and “nudging” tools to encourage shifts to public transport; and creating the public campaign and website. Unfortunately, all of this has disappeared (although the Wayback Machine is always our friend).

Part of the former SmartMove website

Proposed Brussels area for distance charging

Registration fees in Brussels start at €79–€6,358 for initial registration, with annual road tax ranging from €107 to around €4,000. Reducing these fixed costs while introducing a usage charge would have made car ownership more accessible, giving flexibility to own a vehicle while raising the cost of peak-time driving.

Modelling by Transport and Mobility Leuven (reports in French and Dutch) indicated that full implementation could cut total kilometres driven in Brussels by 12% on an average working day, 18% in the evening peak, and delays by 30%. Even after cutting registration fees, the scheme was projected to generate an additional €250 million a year, partly from visiting vehicles.

Some of the benefits modelled for SmartMove were:

€54.1m per annum in economic benefits for all of Belgium
€11.4m per annum in health benefits (mainly from more active travel and the subsequent health benefits)
€10.6m per annum in reduced accident costs
€9.8m per annum in reduced emission costs

The project noted that on an average weekday, around half of all light vehicles driven in Brussels are not registered in Brussels. Pricing those vehicles alongside local ones would be essential to reducing congestion. Notable, the average car trip length in Brussels is only 6km.

Why was SmartMove potentially revolutionary?

SmartMove would have been pioneering. Unlike Singapore’s evolving GNSS-based ERP 2.0, it relied on ubiquitous consumer smartphones rather than dedicated on-board units or OEM telematics. With the ability to price by distance, location, time of day and vehicle type (lower rates for EVs and micro-cars, higher for larger ICE vehicles and SUVs), it could have differentiated arterial routes from local streets and applied fine-grained peak pricing. The app was also intended as a broader Mobility-as-a-Service platform offering journey planning, pricing and ticketing for alternatives to driving.

SmartMove could have been the most highly evolved road pricing system anywhere.

By using mobile phones, it was a significant shift from concepts involving bespoke equipment being installed in vehicles, or accessing OEM telematics, to a consumer product that is almost ubiquitous – smartphones. Technology that hardly anyone in either the Intelligent Transport System or transport planning community anticipated.

SmartMove website sales pitch

What happened?

The test phase began in August 2020 with 100 Brussels Transport Authority employees, expanding in September to 2,000 citizens. The pilot costed the Brussels government €24.8 million and it ran through the pandemic, being extended to June 2022. €51 million EU grant toward a total estimated implementation cost of €68 million), ran through the pandemic and was extended to June 2022.

The app showed participants what they would have paid under the new system versus existing fees and awarded points (with real value) for driving less at peak times or switching modes. Because no real money changed hands, the trial mainly tested technical feasibility and user appeal. Preparation for full rollout included purchasing ANPR cameras in 2022 to match vehicles to accounts and fine those without an active app. Forgetting a phone, a dead battery or app failure would have risked a fine—an obvious practical weakness.

Opposition and cancellation

Perhaps the biggest critics, and understandably so, were residents (and politicians) from neighbouring Belgian states. Belgium is a federation, with Brussels being one of the three constituent states. If Brussels implemented SmartMove it would have granted Brussels residents a significant cut in vehicle registration fees in exchange for paying the charge. However, owners of vehicles registered in Wallonia or Flanders that commute into Brussels would face the charge, without any such reduction. After all, the other states would not get any revenue from it, so it would effectively be a charge on non-residents driving into Brussels. Legally, Brussels was required to implement it on a co-operative approach with the other states, and it was likely that had it proceeded it would face a legal challenge, constitutionally, due to their opposition.

However, it was opposition in Brussels that saw the programme fail, and the main reason was that it was seen as being anti-car, anti-motorist and was (wrongly) interpreted as being alongside a whole package of other measures (called GoodMove) which were designed to make driving slower (for safety), more difficult (by reallocating road space to other modes and reducing on street parking), and less attractive.

The changes to the Brussels Government, following the June 2024 election and over 600 days of coalition negotiations, were the death knell of the project. The coalition government is now led by the Reformist movement - the centre right liberal French-speaking party, in coalition with five others. The length of those negotiations indicated how fraught they were, and anti-car measures have been cancelled as a result.

On top of making driving slower and more difficult, there was opposition to the cost, and with the possibly of legal challenges from the other states, it was easy to cancel. Furthermore, actual support for the proposal was muted. A key reason for this was the emphasis on implement road pricing to reduce emissions and encourage changes in behaviour, rather than seeing it as a measure to reform the taxation of motor vehicles in a way that would reduce congestion.

Motorists are more likely to support congestion pricing if other charges are cut, and if it can be proven to reduce congestion. They are less likely to do so if it is seen as a tool to "correct" them, as if they are themselves failing by how they choose to get around, and they are especially less likely to do so if it is just seen as a new tax, with little benefit (unless you stop driving).

That’s unfortunate, because it could have been recast as a project to make driving more accessible and efficient with lower fixed fees, but better mobility at peak times. By primarily being a redesign of the tax system around motor vehicles, it could have been seen as improving fairness. Poorer people, single parents or pensioners who use cars to access employment on the urban periphery, or social services, or visit family and friends could have had lower costs of travel with lower registration fees.

What can be learned?

Leaving aside the constitutional issues, as it was bold to even think it could have been plausible to tax motorists from outside Brussels, while only compensating those within, the main mistake in Brussels was seeking to do too much in one step and to not sell it as being primarily about making motoring taxes fairer.

It is always a big deal to convince people that paying more to drive reduces congestion, but to do so without being able to convince people they would also save a lot of money from owning a car was difficult. Emission reductions are good of course, as is making public transport (especially buses) move more freely and improving the urban environment altogether, but it needs to be about the people most directly affected - the motorists. While there were some efforts made to sell congestion reduction benefits to business, these were overwhelmed by concern about the cost.

The app concept was a challenge, as it presented the risk that if you forgot your phone or it did not work, you would be fined for not paying. That should not have been the only way to interact with the system as it risked mistakes being punished.

Options of paying a flat fee for driving per day would have been easier to understand, and not hard to implement without it being punitive. The app could have been one option alongside a more blunt ANPR based scheme.

So there was a failure in policy, driven in part by technologists wanting their solution to be all encompassing. Most of all there is a failure to communicate enough to motorists and design a policy that can be acceptable to them. Furthermore to do this alongside a whole host of other measures to make driving more difficult makes the main objective look like it is anti-car. Despite the best efforts of some transport planners and politicians, perhaps the biggest lesson in the past few years politically is that the public don't like being told that what they do is wrong and they need to be corrected.

Other jurisdictions have proven that distance based road user charging can be implemented for private car owners and be acceptable, as long as it replaces another tax very clearly and transparently. Others have proven that congestion pricing can be implemented if it makes driving for those paying easier, more reliable and faster.

Unfortunately, the Brussels Government and the SmartMove programme can join the list of cities that nearly implemented congestion pricing, and help inform those who might actually do it.

Romania to be the next country to implement heavy vehicle road user charging

2026-09-04T19:11:25.692+12:00

Following on from the Netherlands on 1 July, Romania will become the 15th European country to launch a distance based road user charging system (truck toll in European parlance), using GNSS technology. It becomes the 16th full country worldwide to have heavy vehicle RUC and the 20th jurisdiction globally to introduce such a system (bearing in mind I am counting the nationwide DSRC based toll systems in Austria and Slovenia in this count, as they are priced by distance across the national highway networks).

TollRo as it is branded is expected to be launched on 1 October (this is a second delay from 1 July and 1 January) and will effectively mean heavy vehicle RUC systems will apply from the Low Countries at the English Channel (Belgium/Netherlands) all the way through central and eastern Europe to the Greek border, and the borders of the former USSR (Belarus, Ukraine, Moldova). TollRo will be the responsibility of CNAIR.

CNAIR is the National Company for Road Infrastructure Administration.

It applies to travel on all motorways (“A” roads), expressways (“DE” roads) and national roads (“DN” roads). This covers over 18,100km of roads (around 29,000 miles).

TollRo will apply to all heavy vehicles with a registered gross vehicle weight of more than 3.5 tonnes. It will replace Romania’s vignette system for those vehicles (although the vignette will remain for light vehicles). The rates for the vignette (essentially a time based pass for those unfamiliar) are below

Category	Vehicle type	Validity	RON	US$
C	Goods vehicle 3.5 t–7.5 t	1 day	20.39	$4.00
C	Goods vehicle 3.5 t–7.5 t	7 days	81.54	$16.00
C	Goods vehicle 3.5 t–7.5 t	30 days	163.08	$32.00
C	Goods vehicle 3.5 t–7.5 t	12 months	1,630.82	$320.00
D	Goods vehicle 7.5 t–12 t	1 day	35.67	$7.00
D	Goods vehicle 7.5 t–12 t	7 days	142.70	$28.00
D	Goods vehicle 7.5 t–12 t	30 days	285.39	$56.00
D	Goods vehicle 7.5 t–12 t	12 months	2,853.93	$560.00
E	Goods vehicle ≥12 t, up to 3 axles	1 day	45.87	$9.00
E	Goods vehicle ≥12 t, up to 3 axles	7 days	183.47	$36.00
E	Goods vehicle ≥12 t, up to 3 axles	30 days	366.93	$72.00
E	Goods vehicle ≥12 t, up to 3 axles	12 months	3,669.34	$720.00
F	Goods vehicle ≥12 t, 4 or more axles	1 day	56.06	$11.00
F	Goods vehicle ≥12 t, 4 or more axles	7 days	280.30	$55.00
F	Goods vehicle ≥12 t, 4 or more axles	30 days	616.65	$121.00
F	Goods vehicle ≥12 t, 4 or more axles	12 months	6,166.52	$1,210.00

Charges will be based on:

• Distance travelled;

• Vehicle weight category;

• Road type (different rates for motorways compared to national highways); and

• Emissions class.

Vehicle owners will have two initial choices to comply with the system:

• Account with a telematics provider (typically supplying a GNSS enabled on-board unit)

• Pre-declared single trip route ticket

To enable interoperability between account managers for toll and RUC systems across Europe into Romania, it has set up an organisation called Serviciul European de Taxare Rutieră Electronică (RoSETRE). It is essentially the European Electronic Tolling System platform for Romania. This will enable existing providers in neighbouring countries to sign up to be certified to operate in Romania, so that, for example, a Hungarian registered truck using a service provider for the Hungarian HuGO system, could use that very system and the account for that system to pay Romania’s charges.

The rates for motorways and expressways are as follows (per kilometre in Romanian Leu):

Vehicle Mass	Euro 6	Euro 5	Euro 4	Euro 3	Euro ≤2
3.5 t - 12 t	0.31	0.38	0.43	0.52	0.61
Over 12 t	0.42	0.49	0.56	0.69	0.81

Lower rates apply for “main national roads” presumably reflecting the lower level of service

Vehicle Mass	Euro 6	Euro 5	Euro 4	Euro 3	Euro ≤2
3.5 t - 12 t	0.25	0.30	0.35	0.43	0.49
Over 12 t	0.32	0.39	0.45	0.56	0.62

For US readers, the rates in US$ per mile are below

Motorways and expressways — approximate charges in US$ per mile

Vehicle Mass	Euro 6	Euro 5	Euro 4	Euro 3	Euro ≤2
3.5 t - 12 t	$0.111	$0.136	$0.154	$0.186	$0.218
Over 12 t	$0.150	$0.175	$0.200	$0.247	$0.290

Main national roads — approximate charges in US$ per mile

Vehicle Mass	Euro 6	Euro 5	Euro 4	Euro 3	Euro ≤2
3.5 t - 12 t	$0.089	$0.107	$0.125	$0.154	$0.175
Over 12 t	$0.114	$0.140	$0.161	$0.200	$0.222

Seven providers are apparently registered to be account managers for the Romanian system. I'll provide more details once it is up and running (and hopefully it won't be delayed for a third time)!

Auckland Council to consult on congestion pricing

2026-08-26T16:50:13.654+12:00

Long time readers will know I have followed (and worked) on Auckland congestion pricing studies for some time. Most recently two big steps have been taken to advance the idea, noting it is labelled "Time of Use" road charging in New Zealand (just to add to the colourful vernacular in road pricing):

New Zealand passed a law authorising the introduction of Time of Use road charging, enabling local authorities to develop proposals to work with central government;
Auckland Transport commissioned study on more detailed options for Time of Use road charging

Incredibly, the Land Transport Management (Time of Use Charging) Amendment Bill was passed unanimously in the New Zealand Parliament, by all six parties.

Auckland Council has voted to proceed with consultation on three time-of-use road pricing (congestion pricing) options for Auckland City later this year.

There was extensive debate about whether to include in consultation an option of the public being able to reject road pricing altogether, but the amendment to do this did not proceed, so the consultation is not the end of the process. Curiously, long standing City Councillor, Maurice Williamson (who was a Minister of Transport in the 1990s and a long advocate of road pricing) wanted the option of the public to say "no" because he said he had a record of pushing through unpopular policies before. However, the consultation will simply focus on what the public thinks of the three options. The process is depicted below. As you can say, once feedback is received on the options, Council will vote on which, if any, of the three options, it will support through to Scheme Initiation.

Scheme Initiation requires a Scheme Board to be set up jointly with central government, which will then commission the more detailed work. That Board will finalise the detailed proposal, obtain public input and require approval of Council and then the Transport Minister to be proceed. The current schedule assumes approval will be finalised in mid 2028, with implementation no earlier than 2030. That means there is plenty of work yet to do.

The options are:

• City centre cordon

• City centre and fringe cordon

• Core motorways with cordon (either 1A or 1C)

The common elements to all proposals are:

AM peak charges in one direction, PM peak charges in the other direction
Shoulder charges so that rates rise and decline either side of the peak
No interpeak charges

City centre cordon

The city centre cordon concept sees an AM peak charge of NZ$3-NZ$4 and PM charge of NZ$2-$3. It would charge around 3.1% of all morning peak car trips, but 23% of trips would see some saving in time. It would reduce car trips by 0.8% and speeds increased by 1.0-2.4% region wide on average (although clearly it would be much higher closer to the cordon and lower in outer suburbs), with a reduction in region wide congestion of 2-4%. The estimate is that those paying will save four minutes on average.

It has the following key advantages:

• Most passenger (unlike freight) trips are modally substitutable either by PT or active modes

• Exclusion of the hospital (and Port)

• Through trips are excluded (which are much less easily substitutable by PT).

However, it has very limited impact. Beyond approach routes into the city centre, it is unlikely that there would be much effect noticed on congestion. While there may be some easing of congestion through the Central Motorway Junction, it is unclear how sustainable that would be as it may attract more through traffic through the centre. It would also encourage some degree of “park and ride” or “park and walk” activity near its fringe, making car parking in Newmarket and Ponsonby significantly more valuable simple because of where the cordon is drawn.

Even those who pay may not notice much improvement, because so much congestion is on motorway and arterial routes far from the downtown cordon, so the benefits of paying to drive in the peaks might be perceived as poor value. The benefits at the city end would be noticeable, but if drivers remain on largely slow roads such as Onewa Road or the Northwestern Motorway for long periods, it may suffer from perceptions of whether it was worth it.

Maybe it is good as a first step, to demonstrate it has some impact, but it is hardly worth being the major scheme.

City centre and fringe cordon

The city centre and fringe cordon has more merit as it captures more trips, including Newmarket, Newtown, Ponsonby and Parnell (there is ambiguity about this). This is likely to have more notable impacts on trips on all arterials and motorways approaching the city. It might be somewhat trivial, but as the “middle” option, I am betting this is the one most likely to be advanced. It moves the “park and ride” issue further out, more into suburban areas (so there will be a need for more residents’ parking or on-road parking restrictions in neighbouring suburbs).

It is notable that this proposal has much higher charges in the AM peak ($5-$6), with $2-$3 in the PM peak, so it is unclear how much of the higher benefits is a function of price, not scheme design. It sees 5.1% of AM peak car traffic charged, with a 1.4% reduction in region wide car traffic. The effect is a 1.0-4.1% increase in region wide traffic speeds (again it seems the averaging will see little impact beyond the Isthmus approach corridors). This represents a 3-6% reduction in congestion across the region. Those paying are estimated to save five minutes on average.

A big issue is inclusion of the hospital, which either can be ignored (as peak only charges do not affect many users), or some discount or subsidy can be offered to vulnerable users with appointments. That would add some costs and require careful design (I recall designing and modelling such an option for Manchester).

Overall, it would demonstrate noticeable benefits for the inner isthmus and even roads approaching the Northern Motorway from the lower North Shore but could only be seen as a first step. The inner motorways would benefit with the reduction in trips using them, but it seems likely this would not be sustainable, as the Central Motorway Junction would gain an uplift in level of service compared to the Western Ring Road, which may attract a transfer of vehicles to take advantage of the (uncharged) time saving.

Core motorways with cordon

Core motorways with cordon is easily the most superior option from the perspective of congestion reduction. Noting it could be included with either of the cordon options above.

The charge would indicatively cover the Northern Motorway (SH1) from the Harbour Bridge south along the Southern Motorway to the Mt Wellington Interchange, and along the Northwestern Motorway (SH16) to the Waterview Interchange, alongside a cordon. The proposal is for peak direction charging on the motorways, although this could be bi-directional. $5 is proposed for the AM peak to access the motorway and the cordon.

The effect is to target 6.9% of car trips in Auckland, reducing car trips by 2% (it is notable that this isn’t a significant increase on the city centre and fringe cordon). It increases regionwide speeds by 4-6%, reducing congestion by 13%. There would be a 9-12 minute time saving on motorways, with a 5 minute saving crossing the cordon (it is not clear if the savings accumulate for those driving on the motorway to cross the cordon). This is significant, but indicates that this option crosses the tipping point where traffic conditions break down, and relieves traffic volumes enough to allow a much more efficient flow of traffic. While 93% of car trips across the region in the peak are not charged, 31% are expected to benefit. Unfortunately, because the option includes no options to prevent rat-running off the motorways, it also predicts 12% would experience minor delays due to diversion.

That point is worth noting only because the option has been developed rather simplistically, when it is technically possible to capture rat running with appropriate sets of number plate camera (ANPR) to deter drivers from leaving the motorway to avoid the charge then using local roads to go past a motorway offramp point. Detailed traffic modelling should be used to ensure this can be addressed.

However, it is clear this option is the one with the most merit in transport policy terms. It has the attraction of being able to be tailored more finely for the conditions on each of the three motorways. It shouldn’t be the same fee on each route in each direction, and at a later stage there are merits in extending charge times on corridors that have enduring congestion – notably the Southern Motorway between Greenlane and Mt Wellington.

Are there better options?

This will be a source of some debate.

Double cordon?

One considered was a double cordon on the Isthmus, which is a bad idea. The proposal below was sourced from the Options Assessment and Policy Framework report (PDF)

Besides the downtown, it added an inner cordon, which would still exempt through trips on the motorway, but charge anyone entering either of the cordons in peak times (so those within the outer cordon would still be charged to enter the inner one). Although it has some positive impacts, this is offset by the blunt impact of having a cordon cutting through residential areas, separating homes from schools, parks, shops and other local amenities for no other reason that the convenience of a traffic engineer drawing the line. It is quite unlike the city centre, which is bounded by the Central Motorway Junction, Grafton Gully and the harbour.

Cordons are effective and avoid serious distortions if there are natural geographic or large scale artificial boundaries which a cordon can be placed onto. Stockholm has much of this, London not so much, but the very low proportion of car trips taken in inner London saw the distortions being very minor indeed. Cordons are for the sake of simplicity and ease of understanding. However, cordons through suburban residential areas have considerable scope to create distortions. Gothenburg experienced this in the northern suburb of Backa, where the cordon literally splits the suburb in two. This meant that local residents, notably elderly ones, driving from their homes to local amenities faced the same fee as those driving into the central city. Technology has been implemented so that only people driving from outside Gothenburg are charged when passing the cordon that runs through Backa (the Backa exemption). The scale of Auckland, which is much larger than Gothenburg, means that a cordon beyond the city centre would mean residents literally charged for taking cars one block, or charged to take children to one school but not another nearby.

I am pleased this option has been rejected, and I fear the city centre and fringe cordon might present some similar issues, but this is about as far as any cordon should go in Auckland

Motorway hotspots

Another option that was rejected was pricing targeted motorway hotspots.

The concept was to price the most congested parts of the network, effectively creating a pilot scheme that could demonstrate the benefits of time-of-use pricing before a wider rollout. While it was never intended as the end-state for Auckland, it could have delivered valuable evidence and public familiarity with road pricing. Unfortunately, I think the option was short-changed by the way it was designed and assessed.

First, no effort was made to mitigate rat-running around charging points. ANPR systems can identify vehicles that leave a motorway immediately before a charging point and rejoin shortly afterwards. Charges can then be applied only to those passing both camera locations, while legitimate exiting traffic remains exempt. The Backa exemption in Gothenburg demonstrates that this is both feasible and established practice. Ruling out motorway hotspot charging partly because of diversion impacts, without incorporating available mitigation measures, risks understating its potential benefits.

Second, modelling behavioural responses remains inherently crude. This is not a criticism of the modellers; it reflects the difficulty of estimating how many people might:

travel four rather than five days a week;
shift travel by an hour or two; or
combine trips more efficiently.

Motorway hotspot charging is likely to rely more on changes in travel timing and frequency than on mode shift, although expanding alternative transport options remains important. The most obvious gap is the absence of the Northwestern Busway, although the corridor already benefits from bus lanes and could support significantly enhanced services.

Finally, the assessment framework appears to favour options with the largest region-wide impacts. That is understandable, but smaller-scale interventions will inevitably produce more localised benefits. Singapore's Electronic Road Pricing system evolved through precisely this approach, targeting specific congestion points and expanding over time. Rather than attempting to solve congestion everywhere simultaneously, it focused on maintaining traffic flow where congestion was most severe.

Too often in the report materials Singapore is depicted more as the Area Licensing Scheme from 1975 (which was a small cordon with manual enforcement of paper based permits) rather than the Electronic Road Pricing system which evolved from 1995 onwards.

Singapore ERP charging points

Auckland could trial a small number of motorway segments with simple, targeted pricing designed to improve traffic flow on those corridors. Such an approach would not transform the entire network, but it might deliver visible results and prove easier to gain public acceptance for than a larger and more comprehensive scheme.

Distance based option

20 years ago, the UK Department for Transport was funding local authorities to develop congestion pricing schemes that would leap ahead of the level of sophistication of the London Congestion Charge (which wouldn't be hard). One way it was going to do this was to fund piloting an option for motorists to pay by distance, time of day and location, rather than just time of day and location, by allowing those who want to, to use in-vehicle technology to measure distance at peak times only, on specific roads identified beyond specific boundaries.

In the New Zealand context this could mean that subscribers to any of the three existing electronic road user charging (eRUC) providers could be charged directly, not based on entering a cordon or a motorway as a flat fee, but by kilometre and have that be at a much lower rate until the fee accumulated to the full charge. The ability to do this has not been explored at all to date, but once the Land Transport (Revenue) Amendment Bill passes, there may be more scope for new entrants into the eRUC market to offer an option to customers to not just pay RUC automatically, but to pay on a different basis to the blunt single charge approach anticipated.

I don't expect either time or budget permitted exploring this further, but it is definitely something that should be considered not just for commercial vehicle users, but any private motorists who wish to do so. e.g. it may be much cheaper to pay for a few kms of driving on a charged motorway in the AM peak than a single flat charge, and also more directly discourage rat running.

Next steps

As public discussion expands, resistance is inevitable.

The Council debate revealed a vocal minority opposed to road pricing in principle, alongside a group of sceptics who remain open to persuasion. Those concerns are understandable. Road pricing is a new charge, and net revenues are expected to be reinvested in the transport system. Questions about whether that spending represents value for money, and whether those paying directly benefit, are legitimate and deserve answers.

What has been largely absent from the debate, however, is a clear discussion about the cost of congestion itself on a personal level, rather than the multi-billion dollar aggregate which most people cannot get their heads around.

No major city has successfully eliminated congestion by building its way out of the problem, whether through road expansion or investment in alternative modes alone. Managing demand is an essential part of the solution.

For Aucklanders, congestion means waking earlier, arriving home later, spending less time with family and leisure activities, and consuming more fuel or electricity. For businesses, it means fewer deliveries, fewer service calls, fewer meetings and lower productivity. Congestion makes the city less efficient, less prosperous and less liveable.

None of the options under consideration will eliminate congestion. They can, however, make the network function more efficiently, improve travel time reliability, encourage better use of alternative modes, and spread demand more evenly across the day.

That alone would be a worthwhile outcome.

Most importantly, momentum must not be lost. Progress to date has been slow, perhaps reflecting the complexity of joint decision-making between central and local government. If the proposals pass the next stage, careful public communication will be critical. The detailed design process must address genuine concerns while avoiding the misunderstandings that so often dominate debates about road pricing.

I look forward to the consultation beginning in November 2026.

What to do?

Clearly those who have strong views on congestion pricing in Auckland should participate in the consultation, but they should all read the documentation provided along with earlier reports (links above). The likelihood that there will be a lot of public opposition is fairly reasonable and understandable, but what would be most productive is to get some indication of the options people dislike and like the most, and why. Besides helping to select the best option, it would also help to refine options and indicate concerns that perhaps haven't been explored sufficiently. There is also merit in understanding whether opponents will be affected directly or not, as well as those who will benefit. What is almost invisible is that bus users at peak times are likely to benefit noticeably with less congestion, as long as buses are not overcrowded as well.

I'm a firm believer that pricing can be designed in a way that has significantly positive outcomes with negative outcomes that can be mitigated, with major city shaping effects. It is particularly important for those who see road pricing as a great tool to punish driving and treat motorists as "car fascists" (as a politician once quipped a few years ago) to end that sort of talk. Nothing will kill off road pricing more than it being dominated by people who want to treat driving as a malignant activity, and by default treat people's choices around where they live, work and play as needing "correction". That's not what the intention of the legislation is, and it is notable that a centre-right government in New Zealand has advanced this policy with the primary objective of easing gridlock, not raising money and not punishing driving. If you can't convince the people that will have to pay that they can be better off from this, it isn't going to proceed, and if you seek to design it so they are not, then it definitely won't.

NSW advances toll reform

2026-08-14T21:45:00.893+12:00

Tolls have been a major political issue in New South Wales (NSW) for some years, or rather (I should say), Sydney.

It is sometimes claimed (including by the NSW Government) that Sydney has the greatest number of toll roads of any city in the world. That's not true. While it has 156km of toll road, Tokyo easily has over double that as does Dallas/Fort Worth (which has about the same length of full toll roads as Sydney, but the same again in tolled lanes/HOT lanes on otherwise untolled roads). Santiago, Chile has over 200km of tolled roads, as does Osaka, Japan.

Of course Sydney does have the longest length of toll roads of any city in Australia. Brisbane has around 90km and Melbourne 78km (although North East Link will add another 10km), so Sydneysiders may feel it is unfair, but Sydney has a lot of toll roads because its geography

Sydney's toll road network is impressive, but toll rates are un-coordinated. The map below depicts the tolled road segments only.

Sydney toll road network

The Independent Toll Review for the NSW Government, released two years ago and led by Professor Allan Fels (former Chairman of the ACCC) as Independent Chair with Dr David Cousins as Deputy Chair, proved controversial, especially with toll road concessionaires.

I wrote about it in three parts: Background, Findings and Recommendations. in 2024.

It is telling that it has taken so long for the NSW Government to determine what was feasible—not merely politically and legally, but commercially—given that most of the state’s toll roads are locked into PPP concessions. This is a legacy of successive Coalition and Labor governments (it is simply not true that the results are just because of the Coalition's "privatisation" policies, when Labor embarked on multiple toll road concessions itself), and simply reflects the rather ad-hoc development of Sydney’s tolled motorway network over the past thirty years. Those concessions have locked in toll rates and, in particular, complex and expensive-to-renegotiate price escalations.

Notwithstanding these constraints, the NSW Government retains some flexibility. It owns two key toll roads (the Sydney Harbour crossings) and can negotiate with concessionaires. Some concessions are coming to their end.

It is therefore a relief that decisions on toll reform have finally been made. While some may argue that the measures only scratch the surface, they represent a step forward.Note that Transurban, as the sole or part owner of virtually all the concessions in Sydney, is also publicising its role in the negotiations. So what is going to occur?

There are 12 toll roads in Sydney (if you count the Military Rd E-Ramps as being associated with the Lane Cove Tunnel), so the impacts vary across the roads.

The official NSW government information on the reforms is here.

Transurban has also published its own press release about the reforms. Transurban says it has been working constructively to enable tolling reform and its own website is replete with useful information. Of course Transurban is, legally and commercially, focused on protecting and enhancing its own profitability, but that also requires ongoing social licence and political acceptability. It's a careful balance for a business that perhaps thought itself somewhat under siege during the Independent Toll Review and understandably so, particularly given its long term interest in protecting its position as lead toll concessionaire and operator for existing (and future) toll roads.

I haven't sought to detail all of the changes, just the main ones.

Tolls reduced or toll increased reduced

Four roads see tolls reduced for most users:

Lane Cove Tunnel (10%)
M2 (longer trips only) (10%)
M7 (10% lowering of the distance cap)
Cross City Tunnel (20% reduction when Western Harbour Tunnel opens).

The Sydney Harbour Bridge and Tunnel toll increases, which were to be 4% are now going to be at 3.25%.

Change vehicle class multipliers

Heavy vehicle multipliers on Sydney toll roads have varied from 2x to 3.47x the standard light vehicle rate. From 1 July 2027, all (except the Lane Cove Tunnel) will be standardised at 3.15x. This both simplifies tolls for trucks, but also ensures demand by heavy vehicles is more evenly spread between toll roads and untolled roads. For example, the Eastern Distributor is cheaper than the M7, effectively encouraging more truck traffic through that central corridor, compared to the M7/M2 corridor.

The other adjustment is to implement a 0.5x multiplier for motorcycles. This is a reduction for all roads, recognising that motorcycles occupy much less road space (and should encourage more use by motorcycle owners).

Two way tolling

This had already been agreed for the Sydney Harbour Bridge and Tunnel, so that tolling will be northbound as well as southbound, which will better regulate demand on both crossings. especially with the imminent opening of the Western Harbour Tunnel.

Two way tolling will also be implemented on the Eastern Distributor, once the Western Harbour Tunnel is opened. With the toll in each direction being 53% of the current one way (northbound) rate, this should also better regulate the flow of traffic in both directions on this corridor, and more importantly across the harbour.

Other measures

The press release indicates that toll concessionaires will pay A$75m over five years to help pay for the weekly toll cap, which is a recognition that it will increase demand on their roads.

The remaining two-lane each way (four lane) sections of the M7 and M2 motorways (Richmond Road to Old Windsor Road) will be widened, at taxpayer expense without a toll increase or extension of the private concessions.

The weekly toll cap will continue. It means that a NSW resident with a personal toll account (such as Linkt or E-Toll) and a privately registered vehicle is subject to a cap of A$50 per week in tolls. It works through lodging a claim for the excess quarterly through Service NSW.

The M5 Cashback programme will also continue (although you cannot use both the cap and the cashback on the same road. M5 Cashback effectively means M5 toll road users, registered with private vehicles in NSW, can claim back the toll quarterly.

Conclusions

It was hard to negotiate any changes with concessionaires, but from an economically rational point of view, several of the announced measures are a step forward.

Standardising vehicle class multipliers makes a lot of sense. For toll roads the multipliers should mostly reflect road space occupancy (and the capital of the capacity built to take the vehicles).

Two way tolling is more rational than one-way, particularly when there are alternative routes that see some southbound traffic use the Gladesville and Iron Cove Bridges, then the Anzac Bridge, to avoid tolls. Moving to two way tolls should rebalance those flows.

Everything else appears to be a subsidy or a cap on tolls charged. There is a point to capping or discounting heavy use of toll roads, as frequent users are undoubtedly over contributing towards the costs of that infrastructure, but blanket caps on private users and the M5 cashback subsidise demand. There might be a point to capping off-peak use, but there is nothing here about charges varying by time of day.

Sydney Harbour Crossings have peak, shoulder and off-peak charges, but that's because they are not subject to a concession. Wider application of time of day varying toll charges would obviously have an impact on congestion and spread demand, but the chances of toll concessionaires agreeing to this with countervailing reductions in tolls over longer off peak periods appear to be next to zero.

So a step forward? Yes.

Does it address all of the fundamental limitations and issues around tolling in Sydney? No. That will have to wait another day.

It's my view that the public image of tolls in Sydney is by far the single biggest barrier to any form of congestion pricing in the city. Quite simply, few believe that pricing roads leads them to flow better and be less congested, or that it isn't primarily about money. Most cities that have introduced congestion pricing did not had tolls on any scale previously (Singapore, London, Stockholm, Gothenburg).

The best hope for Sydney demonstrating congestion pricing in some way, in the medium term, is the state applying higher peak charges on the tolled routes it owns in exchange for cheaper off-peak charges (to encourage use of spare capacity). Perhaps once the Western Harbour Tunnel opens, and all harbour crossings are tolled two-way (once more), there may be more will to do this.

UK announces further details of its electric vehicle road user charging proposal (eVED)

2026-07-20T17:47:57.732+12:00

I wrote in December 2025 about the proposals from the UK Government for what it is called eVED or Electric Vehicle Excise Duty. Elsewhere, this would be known as a distance-based road user (or road usage) charge, and is intended to apply to EVs, PHEVs and hydrogen fuel-cell vehicles that are light passenger vehicles.

The UK is following Iceland and New Zealand, which are the first two countries to mandate distance-based road user charging for EVs and PHEVs. It is also following in the US, Oregon, Utah, Virginia, Hawaii and Vermont all of which have or are introducing opt-in distance based charges (with the option of an annual fixed fee) for similar vehicles.

The significance of the UK is it will, when implemented, be the largest light vehicle road user charging system in the world (based on numbers of vehicles it applies to).

There are around 2.8 million vehicles today in the UK that it will apply to, which is larger than the number light vehicles that are subject to RUC in New Zealand (currently the largest - which is around 1.2 million light vehicles). That number will be exceeded when New Zealand shifts all remaining petrol powered light vehicles to RUC (which will mean around 4.3m light vehicles on RUC).

What is VED?

In order to avoid confusion in terminology, what is meant by Vehicle Excise Duty in the UK is broadly equivalent to annual vehicle registration or licensing fees in most other jurisdictions. This are broadly fixed fees for a duration (one year or smaller increments), based on a vehicle classification which may be by size, type of vehicle, gross maximum weight, engine size, fuel type or emissions class, or some combination of those.

The eVED proposal is for a fee based on distance travelled to apply to BEVs and PHEVs.

What's happened now?

The UK Government has now published its response (PDF) to consultation on the proposal.

The details of the proposal have been updated on the UK Government website here.

In short:

On 1 April 2028, light BEVs, PHEVs and hydrogen-fuel cell cars will be subject to eVED. It only applies to "light passenger vehicles" so not light commercial vehicles.
The charge will be £0.03/mile (US$0.025/km) for BEVs and hydrogen-fuel cell vehicles and £0.015/mile (US$0.0126) for PHEVs.
Charges will be increased in 2029 and 2030 in line with the Consumer Price Index.
Drivers will be required to provide an odometer reading when they re-register their car for VED from that date, and to estimate mileage for the YEAR ahead.
Drivers can choose to pay for the entire estimate upfront in advance, or in instalments spread through the year. Reconciliation of the correct amount will happen at annual VED time.
It is expected to generate £1.1b (US$1.48b) in revenue in the first full year, increasing to $1.435b the subsequent year and £1.865b in the year after that.
The effect on EV sales is expected to be a 2% reduction over a five year period.

So the fee will not apply to any other BEVs or PHEVs (i.e. light commercial or heavy vehicles)

Several other important elements include:

Net revenues will be treated as general tax revenue. It will not be hypothecated for road spending or transport spending. This reflects fuel duty, but does not reflect practice in any other jurisdiction, which generally sees it hypothecated for road spending or to support further vehicle electrification.
No provision has been made to require that there be a location-specific option for measuring distance available for vehicle owners who want it. This means that such vehicles located in Northern Ireland which cross the Irish border, will be subject to the fee for any distance driven in the Republic of Ireland. Likewise, driving such a vehicle outside the UK will see the fee charged at the same rate. Officials may say it is the same case with fuel duty, except that fuel duty isn't paid infinitely on travel outside the UK. At some point the vehicle will need refueled, and would be subject to fuel duty in the country of purchase. If the Republic of Ireland or say France introduced a similar fee, imposed on visiting vehicles, then it would mean UK registered vehicles are double taxed.
The fee only applies to UK registered vehicles, so visiting BEVs. PHEVs and hydrogen fuel cell cars will pay nothing.
Verification of odometer readings only occurs when safety inspections are undertaken ("MoTs") , which only needs to happen after a vehicle is three years old. This raises the real risk of vehicle owners facing a very high initial EVED bill if their estimate of miles for the previous three years has been low. This is particularly the case if it has changed ownership, as the incentive will be for the owner for the first two and a half or so years to estimate a very low mileage and pay (and lie about mileage when renewing VED), and to sell the car, with the subsequent owner receiving the first MoT and the verified odometer reading being much higher. This might be resolved if change of ownership includes records of reported mileage to be compared to actual mileage on sale.

The proposal continues to upset the EV retail lobby which sees it as risking EV sales overall, but it is a fairly simple plan, and it does only partially recover revenue that would otherwise have been collected from fuel duty if the cars were petrol or diesel powered.

Nevertheless, assuming it proceeds it means the UK will be introducing a road user charge from July 2028 which is distance based, largely as a partial revenue replacement for fuel duty. This will follow Vermont in January 2027 and New South Wales in July 2027.

We will await to see if the new British Prime Minister, and Chancellor of the Exchequer will see these plans change, once again. However, given the experience of multiple other jurisdictions, it appears the UK has gone for an excessively simplistic approach, when it should have been more bold.

What could the UK do instead?

Allow odometer self-reporting via app, to spread out payments: The average car in the UK is driven around 7,200 miles per annum. That means £216 a year if charged 3p a mile. It should be possible for those who want to spread that out up to four times a year to do so, if they submit odometer readings (either through an app or to an independent third party). Iceland bills motorists (in fact all vehicle owners for all vehicles) monthly, with an estimate which can be corrected through submission of an actual reading. This added flexibility will better suit some users, and avoid the pressure of a higher annual fee.
Allow the market to enable third parties to provide distance measurement and account management services, including the option to exclude distance off public roads including outside the UK: Complaints about driving to Ireland or France are valid, so the option to avoid paying for distance in other countries should be available, although not government led. Likewise, some people in rural areas may want to avoid paying for distance travelled on private properties. Some Treasury officials will insist this is fair because fuel duty is consumed for such trips, but if the UK is not interested in moving more towards user pays in road charging then it is missing out on an opportunity for more efficient and fairer pricing
Hypothecate the revenue and subject increases to regulatory review: Treating it like just another tax prevents there being more flexible charges and pricing in future, and also undermines its potential acceptability. If net revenues were used to help pay for road maintenance, then the rates they are set at can be based on the cost of providing that infrastructure allocated proportionately to those vehicles. This becomes the embryo of a national road user charging system for all vehicles that recovers infrastructure costs much more fairly and efficiently than the status quo. Not doing this leave it as just another tax, and provides no link between what is paid and what service is delivered.

It is easy to see why this proposal might be scrapped, except that the government will urgently want over £1b in revenue per annum, and will also want to start sending the message that driving is not "free" if you have an EV. Surely it would not be difficult to enable the private sector to provide solutions to make it easier both for fleet operators, and for vehicle keepers whose vehicles leave the UK regularly to not have to be subject to paying for distance travelled outside its jurisdiction? (even if such solutions are not necessarily available to all vehicles on day one).

Vermont will be the next US state to implement RUC

2026-07-01T13:58:10.898+12:00

Following in the footsteps of Oregon, Utah, Virginia and Hawai'i, Vermont has passed legislation implementing a distance based road user charge (PDF) (called a Mileage Based User Fee - MBUF) from 1 January 2027. This of course makes Vermont the sixth US state to introduce a road usage charge for light electric vehicles.

It will apply to battery-electric vehicles registered in Vermont (so not vehicles visiting from other states) charging US$0.014 per mile (US$0.0087/km). The maximum payable within a 12 month period is US$178 which is around 12714 miles (a relatively high cap).

All US states that have implemented RUC for light vehicles have implemented a cap, unlike jurisdictions in Europe and New Zealand (and unlike fuel tax!).

Vermont MBUF will be measured using odometer readings, initially. With options to pay:

Annually, following one odometer reading (e.g., at safety inspections);
On a regular basis (at an interval determined by the Commissioner of Motor Vehicles) known as "pay as you go"; or
Flat fee at the level of the cap (US$178).

Part of the programme includes a transition plan to expand beyond battery electric vehicles.

It will be expanded to PHEVs from 1 January 2029 with work to be undertaken on "additional mileage reporting options" specifically referring to location based options so that distance travelled outside Vermont could be excluded. Indeed, the legislation indicates that there should be at least one option for motorists to distinguish between distance travelled in state and out of state when it is extended to PHEVs.

Inclusion of PHEVs is also dependent on developing a fuel tax credit system to refund fuel taxes, based on the vehicle's fuel economy. It is unclear if this simply allows for estimations of fuel consumption or actual fuel consumption.

Furthermore, the transition plan will also investigate expanding coverage to medium and heavy duty EVs and PHEVs, although no date has been set for such a transition or decision made to actually expand beyond light EVs and PHEVs.

Earlier discussion in Vermont's legislature considered MBUF applying to all vehicles, so it is clear that there is a path by which EVs and then PHEVs are paying by distance, with future application to heavier vehicles of the same motive power and then applied to other vehicles.

What is notable for Vermont is:

No RUC pilot was run in Vermont, rather this has followed a feasibility study and the operation of an advisory committee.
Explicit inclusion of a location enabled option for the next phase, indicating the importance of addressing vehicle owners not being charged for out-of-state distance.

There will be clearly be more forthcoming about this in future months, as the rollout date is short, but at least at first it will be a relatively simple low-cost system.

Challenges will be:

Not charging out-of-state vehicles to use the roads (such vehicles pay fuel tax when filling in Vermont now, but won't be included, largely because of political reluctance and legal complexities in identifying and enforcing such systems for out-of-state light vehicles (note than Oregon's Weight-Mile Tax applies to trucks regardless of the state where they are registered, for driving on public roads in Oregon.
Selecting a suitable location based system for PHEVs (which could presumably also apply to EVs).
Obtaining public acceptability for the final approach to credit fuel taxes to PHEV owners (noting Oregon has been doing this for some time).

Does road user charging deter electric vehicle sales?

2026-06-18T13:54:55.056+12:00

On 20 May 2026 I had the privilege of presenting a seminar at the University of Sydney, Institute of Transport and Logistics Studies, on the topic of "Road user Charging in Australia: Finally, after 20 years?".

One small piece of research I pulled together when preparing the seminar was to look at reported quarterly sales data for EVs (pure EVs, not hybrids) as a proportion of all new light vehicle sales, for New Zealand, Australia and Iceland.

The reason being fairly simple. It is to identify any discernible impact on EV sales of the presence or absence of a distance based road user charge (RUC).

New Zealand introduced RUC for EVs on 1 April 2024.

Australia has no RUC for EVs.

Iceland had introduced RUC for EVs on 1 January 2024 and expanded it to all vehicles on 1 January 2026.

New Zealand's RUC rate for light EVs is the same rate for light diesel vehicles, and broadly equivalent to petrol tax. That rate is NZ$0.076/km including GST of 15%. Excluding GST this would be US$0.038/km or US$0.06 per mile.

Iceland's RUC rate for light EVs is ISK6.95 per km or around US$0.06 per km or US$0.1 per mile.

The result is fairly clear. There is no significant relationship between the introduction of RUC and EV sales.

Nine months after Iceland introduced RUC on EVs, sales grew and have continued to grow as a proportion of new light vehicle sales.

In New Zealand there was no drop at all, although sales remained slow and only picked up recently, this is mainly attributable to poor economic growth and the after-effects of the removal of a major subsidy to buy EVs that was scrapped at the end of 2023 (bringing many sales forward before that time).

Meanwhile, Australia, which has no RUC at all, has only slightly higher EV sales than New Zealand (although Australia has lower fuel tax, and higher incomes).

The oft-cited claim, seen in Australia, the UK and the US, is that requiring EV owners to pay to use the roads would deter their sales, relative to non-EVs, is largely specious. While lobbyists in those jurisdiction get political and media attention for their claims, the reality - in jurisdictions that actually have introduced mandatory RUC for EVs, is that it makes next to no difference.

New Zealand Transport Minister recognises road pricing as a tool to defer new road capacity

2026-05-04T20:42:00.002+12:00

It’s extraordinarily rare for politicians leading transport policy to understand road pricing beyond one dimension. Either they think it is a great way of raising money they can spend on projects that they can sell to the public, or it is a great way of reducing traffic, it’s rare to see an understanding of economics.

In New Zealand it is seen with the current Minister of Transport, Hon. Chris Bishop. For context, New Zealand has recently passed legislation to allow for time-of-use road charging, the term used in New Zealand for congestion pricing. It will allow local authorities, in partnership with central government, to set up road pricing schemes specifically targeted to reduce congestion. Auckland is already some way ahead in developing recommendations for congestion pricing and is expected to advance proposals in the coming year.

The primary purpose of congestion pricing in New Zealand will be to reduce congestion, noting that such pricing will also generate net revenues, which will be used subject to agreement between central and local government. This will likely see net revenues directed towards a range of transport projects in the city or district where the pricing scheme operates.

However, there is another feature that road pricing enables, beyond raising money and getting better use of existing road infrastructure, which is to provide information on where better to direct future road capital spending.

Bishop hinted at this in February 2026 when the National Infrastructure Plan was released by the Infrastructure Commission. It noted that road pricing could “defer the need for expensive capacity expansions”.

Radio New Zealand reported on 18 February 2026:

Asked whether time of use charging should be used first before committing funds to two tunnels, Bishop said it was an option under consideration and he would have more to say soon.

"I'm not cancelling the tunnel, but we are giving active consideration to what time-of-use pricing might do to our transport projects. You have to factor these things in, because thay are a mechanism for demand management and making more efficient use of our infrastructure, which is exactly what the commission says."

The project referred to is to duplicate two tunnels in Wellington city (known as the SH1 Wellington Improvements project), both of which are subject to significant congestion at peak times (and frequently off-peak times). It's a project primarily about congestion, but also resilience (the Terrace Tunnel has one-lane southbound, and Mt Victoria Tunnel is 95 years old with only one-lane in each direction) and helping to move traffic from the waterfront highway (which acts as a backup to the network, but separates the waterfront from the central business district).

Wellington State Highway 1 network issues

Proposed second Wellington Terrace Tunnel (northern end)

Proposed second Mt Victoria Tunnel (western end)

Both tunnels are part of State Highway 1, which is the main highway into the city, but also bypassing the city centre towards the airport, eastern and southern suburbs. Congestion pricing would be likely to reduce traffic on this route, particular traffic using the tunnels to drive into the central city.

The current New Zealand Government went to the previous election promising to build the project. That may still happen. Finance Minister, the Hon. Nicola Willis, has said it will proceed.

Of course the simplest, and possibly least controversial option, would be to proceed with the project, and introduce time of use road charging to help pay for it, but also manage demand from the additional capacity, by placing a cordon within the boundaries of State Highway 1. This would mitigate fears that the new capacity would induce demand away from public transport for trips into the central city, ensure that the new capacity worked efficiently.

Yet the most economically efficient option is to introduce pricing in advance, to determine if it would sufficiently reduce demand to defer the need for the new tunnel capacity. That is certainly worth investigating. There are two key elements to this approach:

What sort of road pricing scheme should be proposed in Wellington, that would optimise network use?
Can that proposed be sufficiently publicly acceptable to proceed?

I've doodled on a map of Wellington suggest a basic cordon concept that might work (inbound AM peak, outbound PM peak) that puts most of the central city behind it, which is also the area with the most intense public transport service (and is accessible on foot and cycle for inner city suburbs as well).

Wellington Time of Use Road Charging cordon concept

Leaving aside a lot of details (e.g. keeping Oriental Bay and Mt Victoria outside the cordon, where to draw the line in Te Aro), the idea is the through route of SH1 isn't priced, because use of it is much less amenable to modal shift, so the first priority should be to encourage modal and time of use travel shift to and from the central city, with a second priority being to encourage time of use shifting predominantly through traffic (see below with lines on the main routes towards the central city from the north and the east). Again the details on whether someone pays twice or just once, whether it be through the cordon or on State Highway 1 is a moot point, and the timing of operation might vary to manage demand, but this is only conceptual at this stage.

Second stage Wellington time of use road pricing, tunnels in addition to cordon

What matters more fundamentally is that a Transport Minister is talking about it. Demand and traffic assignment modelling would identify whether a reasonable price for a downtown cordon would sufficiently reduce traffic numbers to relieve congestion at the two tunnels, or whether by pricing the waterfront route, the 15-20% of traffic on that route that is bypassing the city relocates onto the unpriced tunnels, effectively leaving congestion at those tunnels where it was before. Although some routes into the city would be relieved, and traffic flow within the city would improve, if it meant no net improvement to traffic along the route the SH1 Wellington Improvements project was intended to fix, then it would be likely to generate some public and political opposition. Moreover, it would not dissipate calls to build the highway improvements.

However, if pricing was also placed on the tunnels, as well as the downtown, then it might make a difference if there was sufficient traffic with enough demand elasticity to be priced away from driving in the peaks.

What next?

The New Zealand Government has a fiscal problem, in that it (like so many governments) has ambitions for capital spending on transport projects that it is struggling to fund. The temptation to delay or defer a project like the SH1 Wellington Improvements project is significant. I expect there to be considerable analysis on the potential for tolling the project (as is the policy of the government), but just tolling the tunnels is problematic, as there are alternative routes (which are inferior, and which analysis has indicated it is preferable to attract traffic from as it is an urban setting, rather than encourage traffic onto). I very much doubt tolling is suitable for this project given tolls are likely to worse congestion on key bus routes rather than improve them.

Time of use road pricing in Wellington is likely to have merit regardless of the SH1 Wellington Improvements project, so should proceed, but there will be a political debate about use of the net revenues. I expect the Mayor and City Council to want to use net revenues to further their preferred projects, but the Minister will likely prefer supporting the tunnels project.

One option could be to use pricing to phase the SH1 Wellington Improvements project, so that the elements with the highest net benefit are advanced first (e.g. around the Basin Reserve, which is a troublesome bottleneck only partly related to tunnel capacity), and tunnels are built in a sequence reflecting demand impacts from pricing.

Whatever happens, it's a great illustration of the key benefit that road pricing can bring, which is a reassessment of the merits of transport capital projects in the light of pricing. For example, it is also possible that road pricing could improve traffic flow for buses, that the need for additional bus priority measures erodes. That has its own political implications for those advocating taking road space from general traffic to give to other modes. It makes it easier to do it, but also reduces the case to do it. What helps is there is the political will to be rational about this, hopefully this will persist regardless of the outcome of the New Zealand General Election later this year.

For the sake of my many overseas readers, some might note that Bishop is from the centre-right National Party, which is in coalition with the free-market liberal ACT Party and the nationalist-conservative NZ First Party. New Zealand's Parliament passed the Land Transport Management (Time of Use Charging) Amendment Bill unanimously, including the three opposition parties. I am unaware of any national Parliament anywhere in the world which showed unanimous support for enabling road pricing by time of use.

When IS the right time for Australia to introduce road user charging?

2026-04-14T00:29:00.000+12:00

RUC is a current issue in Australia

I was fortunate enough to be moderating a panel at this year's ITS Australia Roads, Tolling and Technology conference in Sydney on 25 March 2026. I also presented on the topic separately.

It was a panel discussions about road user charging and I was honoured to be moderating such a stellar panel of expertise, namely:

Professor David Hensher AM, Founding Member of University of Sydney's Institute of Transport and Logistics Studies;
Bianca Slack-Smith, Director Legislative Reform and National Policy at Transport for New South Wales;
Adrian Dwyer, CEO of Infrastructure Partnerships Australia;
Hon Paul Fletcher, Advisor at Compass IOT and former Minister of Urban Infrastructure and Cities (2016-2018), and Minister of Communications, Urban Infrastructure, Cities and the Arts (2019-2022);
Daniel Antonello, CEO of Here Technologies.

The panel discussed a wide range of issues. The broad conclusion was that distance based road user charges (RUC) should be introduced, starting with EVs, and be focused on replacement of fuel duty revenue. The rates should be set to be broadly equivalent to fuel duty, and it should be a simple, easy to implement system, with the potential to allow for more sophisticated solutions for those who want it.

Although RUC for EVs is an opportunity, especially for State and Territory Governments in Australia to access a new source of revenue, it should be focused on equity. Equity being the point as to why people who can't afford to buy a new vehicle, let alone an EV, should pay to use the roads, but EV owners should not.

Starting now with EVs was seen as making little difference to EV sales, but making it much easier to implement than a time when there might be substantially higher numbers of EV owners - who would be opposed.

There should be a nationally consistent system, with a basic product (manual distance measurement and reporting) available for all, and digital/location based options available for those who want them (e.g. to avoid charging distance travelled off public roads).

Previous efforts to advance heavy vehicle RUC were seen as not the priority for now, as it is too politically difficult, although heavy EVs should be part of any RUC system.

Any net revenues were proposed to be used, for the first few years, to support expansion of the public EV charging network, to help address range anxiety, although longer term such revenue might be used to support funding of road maintenance (noting fuel duty has not been hypothecated in Australia for over 30 years).

So following that event, it is worth noting where Australia is right now:

Federally, the Commonwealth Department of Infrastructure has set up a RUC Task Force to investigate policy options.
Legislated is in force in New South Wales to implement RUC for EVs and PHEVs from 1 July 2027, and the NSW Government has indicated it would proceed to implement RUC whether or not the Commonwealth Government proceeds with a nationally consistent approach;
A High Court of Australia decision (Vanderstock vs. the State of Victoria) ruled Victoria's RUC system for EVs and PHEVs was unconstitutional.

Many State and Territory Governments are supportive of RUC for EVs, not just for revenue, but also because it means EV owners pay to use the roads (whereas at present arguably bus passengers pay more to use the roads than EV owners), which will moderate driving particularly in cities.

However, the big stumbling block is whether there will be a single national RUC charge, similar to fuel duty, which the Commonwealth will need States and Territories to collect, or if the Commonwealth might at least enable States and Territories to collect RUC.

The prospects for this have varied over recent years. Whilst Treasurer Jim Chalmers is reportedly in favour of it, Transport Minister Catherine King has been reported as being sceptical that any legislation could get through Parliament. She noted concern that any RUC would hinder EV sales.

This last point is argued by EV importers who, of course, support every single measure to subsidise or discount EVs and their use of the roads, and treat any measures to equalise their treatment with other vehicles as harming Australian progress towards reducing emissions. Besides obviously being self-serving, there is not good evidence that RUC hinders EV sales.

Iceland introduced RUC for EVs in 2024, when EV sales were high. However today 33% of light vehicle sales are EVs in Iceland. In 2026 Iceland abolished fuel duty and put ALL vehicles on RUC, but it has had little apparent impact on vehicle sales, largely because EVs still cost 55% less to operate than petrol vehicles (see below from Iceland. 1 ISK = US$0.0082).

Hawaii introduced a choice of RUC or a fixed annual fee for EVs from 2025, and 7% of light vehicles sold in Hawaii are EVs (5% are PHEVs). New Zealand introduced RUC on EVs from 2024 (following abolition of a subsidy scheme that was signalled to be removed at the end of 2023), and EV sales were 6% of new vehicle sales (before the Iran-US conflict) with PHEVs at 5% of the market. Since the beginning of the Iran-US conflict, EVs have reached 16% of new light vehicle sales in New Zealand, with a RUC of around A$0.06 per km. It was just under 15% across Australia, with no RUC.

Essentially, paying a relatively small amount to use the roads has little real impact on the benefits that EVs provide in reducing running costs.

But there is a bigger issue.

How road vehicles are charged and taxed has little coherent basis in Australia. Australia has some of the highest vehicle registration fees in the world, primarily because these are fees collected by States and Territories (which don't collect fuel duty). It's fuel duty, collected nationally, in usual conditions (it is half price because of current petroleum prices), it is neither hypothecated, and heavy vehicle owners pay a significantly reduced rate compared to light vehicle owners, because... heavy vehicles are subject to a fuel and registration based "road user charge" (which is just fuel tax and registration set at rates that are meant to try to reflect costs attributable to such vehicles).

There is little political appetite let alone mandate for wholesale reform, as badly as it is needed, but a start would come from enabling States and Territories to charge the largest portion of the vehicle fleet that pay literally nothing to use the roads.

No one can rationally doubt the relative environmental benefits of EVs, but driving an EV in inner Sydney is not more environmentally friendly than taking the train or bus. It uses roadspace, it contributes to congestion, and relies on the maintenance and renewal of roads, which are enormous capital intensive assets.

There's little evidence that RUC on EVs affects sales.

There is evidence that delaying RUC on EVs makes it harder. In the UK it is highly controversial, in California it is approaching 10 years since it was first studied and piloted, and it seems as far away as ever.

The Commonwealth should set a date for a national EV RUC that is expects all States and Territories to collect. It should also allow them to collect their own, and might develop a framework within which that should operate. This should include rules about off-road use, about open standards for digital means of measuring, reporting and collecting RUC, rules around what account such revenue goes to, and around rate setting. The NTC could have a role in this, as it does with the fuel/rego based "heavy vehicle road user charge".

Meanwhile, it should let States and Territories proceed themselves within such a framework, starting 1 July 2027 (to match NSW). It should start with EVs and PHEVs, including heavy EVs, and the signal should be that it will be extended to other vehicles in due course, such as battery-electric hybrids and other new vehicles.

The easiest time to do this is now.

Terminology: Road user charging, tolls... what do people mean?

2026-02-11T18:15:00.002+13:00

I've written about this before, but I thought it was timely to repeat the point...

Early on with this blog I bemoaned the plethora of words that have been created to mean different ways of pricing for road use, and the willingness of different jurisdictions to mix and match these terms.

I tend to use the following three terms to mean separate pricing concepts:

• Tolls: A fee, which may or may not vary by vehicle type, direction of travel or time of day, for using a specific segment of road infrastructure. Commonly bridges or tunnels, but also frequently new sections of motorway, superhighway to provide a faster, more direct connection than the pre-existing route. Tolls typically charge fees for passing specific points on that section, either a single entry or exit point, or multiple points. Most tolls exist to recover the capital costs of construction and the maintenance/operating costs of the tolled infrastructure, but some persist beyond the “payback” period for the road, and are used for other purposes.

• Road User Charge (RUC): A fee which charges for use of a road network, based on consumption of road space through distance. It typically varies by vehicle type and may vary by location and/or time of day (but not necessarily except by identifying being on the priced network). In some jurisdictions fees may vary by emissions category of vehicles. Fees are typically metered or by prepayment of distance. RUC exists to recover network wide road costs, and to reflect differences in consumption of road use, and for heavy vehicles different costs generated from network use.

• Congestion charging/pricing: Fees set based on time of use and location for the use of a road, set of roads, or network of roads (or a lane or lanes on a road). These may range from a single all day pass to use the priced road, or metered use of the priced roads. There will be a variation by time of day, with higher prices at peak times of demand, and there may be variations based on direction of travel. Congestion pricing is usually designed to change behaviour, reducing congestion or emissions. However, many jurisdictions design them to raise revenue to pay for specific infrastructure projects, including non-road infrastructure.

There are variations which crossover between these. Toll lanes and HOT lanes, look a lot like toll roads (but not all lanes) and congestion pricing (because they don’t operate a single price 24/7). However, I will fail in having a universal application of these definitions because….

In Europe, road user charging is called “tolls” usually. Why? Because EU Directive 1999/62/EC… defines tolls (Section 2(b))

means payment of a specified amount for a vehicle travelling the distance between two points on the infrastructures referred to in Article 7(2); the amount shall be based on the distance travelled and the type of the vehicle

European Commission Directives call distance-based road charging “tolls”. This is why when “truck tolls” are discussed in Germany, Poland, Bulgaria, Belgium etc, it isn’t meaning a handful of roads being tolled, but an entire network. Although most European countries don’t apply charges to all public roads (Switzerland and Iceland are notable exceptions), most of these systems resemble road user charging systems, not tolls. Of course, Austria and Slovenia look a lot like toll systems, because they use toll technology (DSRC toll tags) to measure road use on motorways for heavy vehicles, with fees based by distance. That’s where tolling and RUC look similar, noting that the technology used in both systems is not scalable to the entire road network, unlike the GNSS telematics-based systems in Germany, Belgium, Denmark etc.

What IS called a “road user charge” in the EU, is actually a “vignette”. It is defined as:

means payment of a specified amount conferring the right for a vehicle to use for a given period the infrastructures referred to in Article 7(2)

That is a time-based prepaid charge for access to a national highway network, based on purchasing a set number of days. The Eurovignette (which only applies in Sweden, Luxembourg and the Netherlands (until later this year)) is the most well known example. Vignettes are being phased out, but they are legally called a “road user charge”. Therefore if you talk about RUC with Europeans, they may think you are talking about vignettes.

In the UK, congestion charging is legally called a “road user charge”. That being a fee imposed for using a specific road or area. Local authorities (and the Secretary of State for Transport) can set up such schemes. They might resemble tolls (the Dartford Crossing is a "road user charge”) or congestion charging (“Durham”), and could be distance based on the specific road or area, but that’s not quite network wide distance-based road user charging.

In the US, congestion pricing is often used to refer to managed toll lanes or high-occupancy toll (HOT) lanes, because there are around 40 of these, and only one actual congestion charging type scheme – New York. That of course confusingly has been called the Lower Manhattan Toll but is now the Congestion Relief Zone.

Also in the US, there is RUC, which is called Road Usage Charging (not User), because that is what Oregon chose to call it. There are also five weight mileage taxes (WMT) which are essentially RUC systems for heavy vehicles. However, they are not related to what those states are doing on RUC, as in the US, RUC is almost always about light vehicles.

Just to add to the confusion, Australia has a Road User Charge, which is not a toll, congestion charge or distance based charge, but is the component of fuel tax that heavy vehicles are subject to pay (they are entitled to refunds of the remainder when travelling on public roads, and a full refund of fuel tax when travelling off public roads). Australia's Road User Charge is a fuel tax on heavy vehicles. This is entirely separate from Australia's policy and political discussions about a distance based road user charge, whether for electric vehicles or heavy vehicles to replace the fuel based road user charge.

I could add the other confusion, which is that heavy vehicles in Australia cover any vehicles with a gross registered mass of more than 4.5 tonnes (whereas in Europe and New Zealand it is over 3.5 tonnes). In the United States heavy-duty vehicles are those over 26,000 US pounds (around 11.8 tonnes). Vehicles from 10,000 US pounds (around 4.5 tonnes) to 26,000 US pounds are medium-duty. Medium duty vehicles are not a category in Europe or Australasia, which sees them all as heavy vehicles.

Confused?

It would be easier to call everything the same. RUC is a great term, except in the UK and Europe. Tolling is a great term, except in the EU where it also means types of RUC. What really matters is what is behind the title, meaning:

What configuration of roads are being charged? (a single point or a whole network)
What is the chargeable event?
What is the basis of the fee?
What is the purpose of the fee?
How is the chargeable event measured?

Iceland's world first: What does it teach others?

2026-02-10T21:00:00.004+13:00

Ten years ago nobody talked about Iceland and road user charging. Even five years ago there was little thought given to the small European island, which is both outside the European Union and inside NATO. With a population barely exceeding 400,000, it ranks alongside the Bahamas and Brunei in numbers. In economic size it sits alongside Honduras, Cyprus and Georgia, although in GDP per capita (PPP) it exceeds Australia, Germany, Japan, France and Saudi Arabia. Iceland's land area is slightly smaller than Guatemala, but larger than Hungary, south Korea or Jordan. It's more than double the size of Switzerland or the Netherlands. However, its road network is small in length, akin to Burundi and smaller than North Macedonia. It has a similar road density to Australia, indicative of a vast area of undeveloped land.

Around 64% of the population of Iceland lives in the Reykjavik metropolitan area. Around a fifth of its population are immigrants, a quarter of whom are Poles. 93% of the population speak Icelandic, but around 98% know English.

The point of all this is to note it is unique in many ways, but it is not especially small compared to many countries. It certainly is a high-income country, and has a notable number of immigrants as a proportion of population.

Given all that, the launch on 1 January 2026 of the world's first all vehicle road user charging (RUC) system is notable as an achievement.

I wrote before about the launch of EV/PHEV/Hydrogen light vehicle RUC as a big step forward and then again in 2025 it was confirmed that Iceland would transition all vehicles to RUC, and abolish fuel tax.

Not only is it an expansion of scope of the EV/PHEV/Hydrogen vehicle "kilometer tax", but it also appears to replace the heavy vehicle kilometer tax that has been in place since

How is it being implemented?

Electric, plug-in hybrid and hydrogen light vehicles have been subject to the fee since early 2024, so will continue to pay as before. They comprise around 16.5% of the vehicle fleet as of the end of 2025. Around a third of cars sold new in Iceland in 2025 are battery electric vehicles, with another 21% cars sold being plug-in hybrid vehicles.

As the fee applies for distance travelled in January 2026, it is expected that an odometer reading will be submitted on 1 February 2026 (with the deadline of 14 February for submitting it). Those that have not submitted a reading for distance travelled in January will be assessed based on the average distance travelled by a car in Iceland during the month of January. This is the basis for future fee payments. Either provide a measurement or be invoiced for an average.

If no odometer reading is made by 1 April 2026, a fine of ISK20000 (US$164.28) will be levied and it will be mandatory for the vehicles to be driven to a vehicle inspection point to have the odometer read. On this occasion, vehicle owners will have 30 days to do this after 1 April.

There are various options for vehicle owners to submit odometer readings:

The Icelandic Government's "island.is" app;
Icelandic Government's internet portal account;
N1 app (app for a fuel, EV charging station and convenience store chain)
At scheduled vehicle safety inspections (Most vehicles are required to be inspected annually)
Scheduling an odometer reading at a vehicle inspection station.

Vehicles up to a maximum registered weight of 10 tonnes (and rental cars) must submit a reading at least once a year, but may do so every 30 days. Vehicles above that weight must submit a reading at least once every six months, but can submit new ones at a time.

Given the legal requirement for vehicle safety inspections, this becomes the primary enforcement mechanism.

Change of ownership triggers a requirement to report the odometer reading at that point, so that the previous owner can be invoiced for the final amount, and the subsequent one has the account for the fee.

There are no telematics based options in Iceland at present, although it appears likely that there will be a strong case for enabling this for trucks with trailers at least, to reduce compliance costs.

How often must you pay?

Vehicle owners are required to pay monthly (with 14 days to pay after each invoice). The choice being whether to send an odometer reading so that it is actual distance driven, or to have an estimate calculated. Estimates will be based on previous readings, or if not available, but the average reading by vehicle type calculated by the Directorate of Internal Revenue (which for cars is 40km per day).

How much are vehicles being charged?

The rate structure is based on registered vehicle weight as follow (US$ are rounded estimates based on today's conversion from Icelandic Krona.

Vehicle class/weight	ISK per kilometre	US$ per kilometre
Motorcycle/moped	4.15	0.034
0 – 3.5 tonnes	6.95	0.057
3.5 – 5 tonnes	9.85	0.08
5 – 6 tonnes	10.44	0.086
6 – 7 tonnes	11.06	0.09
7 – 8 tonnes	11.73	0.096
8 – 9 tonnes	12.43	0.102
9 – 10 tonnes	13.18	0.108
10 – 11 tonnes	13.98	0.115
11 – 12 tonnes	14.81	0.124
12 – 13 tonnes	16.29	0.134
13 – 14 tonnes	17.92	0.147
14 – 15 tonnes	19.71	0.162
15 – 16 tonnes	21.68	0.178
16 – 17 tonnes	23.86	0.197
17 – 18 tonnes	26.25	0.215
18 – 19 tonnes	27.37	0.224
19 – 20 tonnes	28.55	0.234
20 – 21 tonnes	29.77	0.244
21 – 22 tonnes	31.06	0.255
22 – 23 tonnes	32.40	0.266
23 – 24 tonnes	33.79	0.277
24 – 25 tonnes	35.24	0.289
25 – 26 tonnes	36.75	0.301
26 – 27 tonnes	38.04	0.312
27 – 28 tonnes	39.36	0.323
28 – 29 tonnes	40.74	0.334
29 – 30 tonnes	42.17	0.346
30 – 31 tonnes	43.65	0.358
Over 31 tonnes	45.17	0.37

Buses get a 10-30% discount for the first three years, and electric, hydrogen, methanol and methane powered heavy vehicles get an 80% discount for the next five years.

Trailers with registered weights over 10 tonnes face similar fees as powered vehicles do in the above table. Trailers are not required to be fitted with hubodometers (as in New Zealand), but those that do not have the fees added to the powered unit, with an independent recording needed to be made by the owner of that unit for distance travelled with trailers (it seems likely that this could be a compliance issue).

Exemptions

Three categories of vehicles are exempt:

- Vehicles for use by rescue teams

- Vehicles registered no later than 1 January 1965 or earlier if demonstrated that the vehicle has no odometer and cannot be equipped with one

- Vehicles owned by foreign embassies and diplomats.

Fuel tax?

On 1 January 2026, fuel tax was abolished in Iceland, resulting in a reduction in the price of petrol and diesel by around US$0.656-0.738 per litre on average (with some petrol dropping by around US$0.78 per litre). This is a reduction of around 30% in the price of petrol and diesel overall.

Revenue from the new system is expected to be akin to that from fuel tax, being around ISK22 billion (US$180 million) per annum.

Lessons to draw?

It is possible to rollout a simple odometer based RUC system, with easy means to report distance travelled using apps as long as it is backed up by a regular vehicle inspection system that provides solid evidence of distance travelled from each vehicle. Together, it means that there is a backup that reduces the risk of fraud.

Invoicing vehicle owners monthly, either by actual or estimated distance travelled means RUC can be seen as more of a utility bill, than a toll or an irregular tax.

Having the option of estimated bills helps to lower the burden for those who don't want to report distance regularly, but also incentivises vehicle owners to report distance to get exact invoices.

Starting with a smaller proportion of the fleet (EVs/PHEVs) reduces risks of any system, because it can provide a bedding in of the business rules and processes with a smaller number of customers (and in particular, ones more likely to be compliant).

Abolishing fuel tax at the same time as rolling out RUC for all vehicles, helps build public acceptance and trust that RUC exists to replace fuel tax, but it is unclear how easy it would be to introduce RUC for all vehicles in one step, if the vehicle fleet were significantly larger.

Having a RUC rates table based on weight classes is likely to better reflect the different levels of wear and tear on the network based on weight, noting that fixed costs don't vary by vehicle weight. However, I question whether one tonne increments are necessary from 5 tonnes upwards, rather than wider bands to reflect averages.

Sure, Iceland has a small population, with many concentrated in one city, and it has little cross border travel (so there is no need for any sophisticated means to distinguish distance travelled outside the country or to tax visitors' vehicles, as this happens infrequently), but it has the foundations of a functional, efficient system to collect revenue and send reasonable price signals as to paying for the costs of providing road infrastructure.

There was some opposition to the tax, mainly from vehicle retailers concerned the tax would suppress EV sales, which it appears to have initially done, but there remains significant savings from owning an EV compared to a petrol vehicle, based on operating costs.

It's early days to determine how much non-compliance there is, which will be important to watch. In particular, whether it affects vehicle registration compliance or if residents of rural areas may be less compliant.

One thing to note is Iceland largely did all of this without a pilot, and without an extended period of detailed design and testing. Iceland had a small amount of help in the early days, but between showing interest in RUC and putting all vehicles on it, has been a period of under five years. The contrast with pretty much any other jurisdiction is astonishing, and perhaps demonstrates a clarity of policy objectives and assessment of options that other jurisdictions could do well to emulate.

California's Road Charge - A study in policy paralysis

2026-02-09T22:07:00.004+13:00

Forbes Magazine recently published an article headlined "California Mileage Tax—Pilot Programs And Permanent Policy Inertia" by Andrew Leahey. It noted that California has been studying road user charging (which it calls Road Charge for a reason that is banal and barely worth noting) for nearly 10 years and there is next to no indication that the state will be implementing distance based road user charging soon.

This is despite nearly hysterical media coverage in recent weeks because of legislation that will essentially continue the status quo for another decade. This is adequately answered by this article in The Californian, but it is fairly damning of the California Road Charge program that this sort of coverage repeats.

The idea that it would be "extremely intrusive" to implement RUC is highly misleading. The idea that it is "inequitable" to charge according to how much distance is travelled, is extraordinarily simplistic (after all, what does the gas tax do?), the idea that rural locations will suffer the most was refuted by research undertaken by RUC America years ago. What is unfortunate is that so much work has gone into pilots and studies in the state, but poor knowledge about the concept remains.

California has run pilots which have demonstrated success and generated plenty of useful data. The first pilot was one I worked on, which had over 5,000 participants, testing a range of mileage measurement and reporting options, and considering what the public response was to it. Since then California has run further pilots and studies, all examining more detailed elements of how "Road Charge" might be implemented, but there is no political mandate to actually introduce it.

In short, while many politicians and public servants know that California will have to introduce a means to charge electric (and hybrid and more fuel efficient vehicles) to use the roads, and it almost certainly will involve charging by distance, the actual political courage to advance it to implementation isn't there. As a result, there is a willingness to keep a program of investigating road user charging going, in perpetuity, until the time comes.

In the period California has been studying road user charging, Hawai'i has piloted and implemented an actual revenue raising program (as of last year), albeit it is currently an option for EV owners instead of paying a flat annual fee. Likewise Virginia has implemented a revenue raising program, as has Utah (Oregon was already operational in 2015). Iceland has gone from investigating to rolling out road user charging for ALL vehicles on all roads as of the past month.

Meanwhile, 4.3% of light duty vehicles in California are EVs, 5.4% are hybrids, 1.3% PHEVs (Source). That's around 34% of all light duty EVs in the United States.

There are no great technical issues hindering the introduction of Road Charge in California, but rather political ones, which seem astonishing in a state where the Democrats have 75% of the seats in the State Assembly and State Senate, as well as the Governorship of the state.

California's Road Usage Charge Technical Advisory Committee was set up by legislation in 2014 and a Bill before the State Assembly will extend it till 2035.

Leahey's article states:

What is really being tested is not a system, or the finances, or even the equity. What is being tested is political tolerance. The pilot is determining how long the state can talk about a road usage charge, create advisory boards, and extend pilot frameworks without triggering significant backlash or having to actually legislate the hard decision.

In other words, California will watch other US states implement road charging, and at some point there is hope that it will be just a formality, because few politicians are willing to stake any political capital on the outrageous idea that... the use of all cars, regardless of energy source, should be charged to pay for the costs of maintaining and renewing the road network.

Of course California has taken another approach, which has been to raise the state's gas tax. It was increased by US$0.12 per gallon (US$0.0317/litre) in November 2017 and again by US$0.056 per gallon (US$0.015/litre) in July 2019. Since then, legislation has mandated an inflation adjustment to the gas tax every year from 2020, meaning it is now US$0.612/gallon (~US$0.162/litre).

This is the highest state gas tax in the USA, so in effect California has been incentivising a shift towards more fuel efficient, hybrid and electric vehicles by taxing gasoline powered vehicles more.

There is a flat fee on EVs of US$175 per annum, but this is lower than the average gas tax paid per annum for a gasoline car. The effect is that around 11% of car users in California are paying less to use the roads than others.

Is that the worst outcome? Probably not, although it costs California taxpayers the resources to keep officials occupied, and pay for consultants to update information. It is entirely plausible by the time California gets to actually implement Road Charge, that there are fair questions to be asked about data collected in 2017 and its relevance. Certainly there is some ongoing technological and cost evolution in that time.

Meanwhile, I can only hope that any future narrative about road user charging in California isn't about it being a "new tax" but a replacement, to level up what vehicles are charged to use the network.

(oh, and the reason why it's called "Road Charge" and not a "road usage charge" or "road user charge", is because it was thought that the acronym RUC rhymed with a rude word. I had no idea such a word was so blasphemous in the state of California!)

UK to implement road user charging for EVs and Plug-in Hybrids - called eVED

2025-12-01T10:26:00.003+13:00

As was widely forecast, the UK's Chancellor of the Exchequer, the Right Honourable Rachel Reeves, announced in the 2025 Budget that the UK will be consulting on introducing a distance-based road user charge (RUC) called, confusingly (and of course deliberately) the electric Vehicle Excise Duty (eVED).

This is distinct from Vehicle Excise Duty (VED) which is essentially equivalent to annual vehicle registration fees seen in most countries worldwide. Both electric vehicles (EVs) and plug in hybrid electric vehicles (PHEVs) have been subject to VED in the UK since April 2025 after many years of exemptions, although the rates for the initial registration of such vehicles are lower than for petrol and diesel vehicles (£10 (US$13.23) in the first year for EV/PHEVs, £110 to £5490 (US$146 - US$7262) depending on the CO2 emissions rating). In the second and subsequent years, most cars are on the same rate for VED. The concessionary rate for VED for EV/PHEVs is currently due to expire in 2030.

VED raises £8.4b (US$11.11b) per annum, and used to be hypothecated to the National Roads Fund, which funds National Highways - the Crown company responsible for England's strategic road network (national highways!). This hypothecation was abolished in 2025.

However, eVED is not like the annual registration fee, in that it is not a fixed tax. The only parallel is that it will be collected at the same time as the registration fee (which is an echo of Hawaii's HiRUC programme which collects HiRUC at the same time as the annual vehicle registration).

eVED is a distance-based RUC, presumably called so because in the UK, the term RUC was used to legally describe any congestion charging type scheme.

(The one commonality around road pricing/RUC is that it appears to be absolutely impossible for many jurisdictions to use the same terminology to name the same concept)

eVED is proposed to apply from April 2028 and the consultation document on the proposal is here.

In one sense this is a huge leap forward. The UK has spent over 20 years with on and off debates about some form of national distance based road charging, and has mostly been focused on highly sophisticated distance, time and location based pricing (at once time known as TDP (time distance place) pricing). However, as much as academics, bureaucrats and technocrats have advanced how and why this should be done, they have proven completely incapable of developing a policy package and communicating such a package to the public, to make it acceptable.

eVED, by only charging EVs and PHEVs, and only being based on distance is a much simpler proposition, and might just happen.

Why?

Fuel tax revenue loss, pure and simple. Also, as EVs pay nothing to use the roads, they are likely to generate more demand for distance travelled than other vehicles, contributing more to congestion.

Fuel tax raised £24.4b (US$32.3b) per annum for the UK Treasury in 2024. Noting none of it is hypothecated, unlike in the US. The average petrol or diesel car owner pays around £0.06 per mile (US$0.079 per mile or US$0.127 per km) per vehicle. This equals about £480 (US$635) per year to use the roads in the UK. Of course this is just an average, but is an indication of a point to compare to EVs and PHEVs.

Fuel duty revenue is forecast to halve by the mid 2030s. Curiously the discussion paper depicts this as a loss of funding for 265 million General Practice doctor appointments (as the UK charges nothing for such appointments, for all residents, regardless of income, under its National Health Service), because fuel duty is not linked to any spending. This is seen as perhaps more politically significant than funding for road maintenance (which is far exceeded by the income from fuel duty).

In short, eVED is to try to make up for this revenue loss for cars.

EV vehicle sales

Treasury reports that around a quarter of new car sales in October 2024 were EVs. The UK Government's policy is to ban sales of conventional ICE cars in 2030 with a further ban on sales of hybrid and PHEVs by 2035 for light vehicles altogether.

How much will it be?

For pure EVs, £0.03 per mile (US$0.04 per mile or US$0.064 per km). Around half the average paid in fuel duty by petrol or diesel cars. Of course at that rate it only recovers half of what fuel duty currently does, which is in part a way to continue encouraging use of EVs relative to petrol and diesel cars. It will be increased according to inflation annually.

PHEVs will be charged at half that rate, at £0.015 per mile (US$0.02 per mile or US$0.032 per km). This is based on nothing more than a political call on what the rate should be, not any reflection of relative payment of fuel duty compared to pure electric use.

How will it work?

eVED will be an addition to VED, and be paid annually. Vehicle owners will be asked to estimate their annual mileage and pay either that whole amount upfront or in instalments throughout the year. The actual mileage will be checked with the annual safety inspection (which only occurs when a car becomes three years old). For the first two years of a car's life, the odometer will apparently need to be checked for the annual registration. This will be another inspection, which it is hoped can simply be combined with vehicle annual servicing (which most owners of new vehicles undertake regardless).

Systems will need to be put in place so authorised MOT (safety inspection) garages can collect and pass on mileage data to the Driver and Vehicles Licensing Authority (DVLA).

At the mileage inspection, if the estimate of the year's mileage is too high, then there will be a credit for the mileage for the following year. If it was too low, then there will be more to pay either in a lump sum or in higher instalments for the year ahead.

When sold, any prepaid mileage will stay with the vehicle, and be visible to any new owners (so it can be factored into the price).

What about foreign vehicles in the UK?

They won't be subject to eVED, until they become subject to VED (which is when they remain in the UK for at least six months). This will be quite an issue in Northern Ireland with its open border to the Irish Republic.

What about mileage driven outside the UK?

Tough. All mileage counts. The view is that there is no refund for fuel duty used in vehicles driven overseas, so the same applies here. Of course nobody pays fuel duty for an entire year, and few even pay as infrequently as monthly, so it isn't quite the same.

Is it just about odometers?

Yes, for now, but the consultation seeks advice on how OEM (Original Equipment Manufacturer) telematics might be used voluntarily to automatically report mileage. The consultation is silent on whether it might be used to exempt mileage driven overseas.

The consultation notes that 2.3% of vehicles have had their odometers tampered with to lower their readings. It is unclear whether this figure is applicable to EVs and PHEVs as much as other vehicles.

What's the money to be used for?

The consultation doesn't say, although there are references to contributing towards the "wear and tear on the roads" caused by cars (which is negligible). It seems likely to be treated as general Crown revenue, and not be hypothecated. This won't help public acceptability or indicate any actual link to what vehicles should pay based on a fair allocation of infrastructure costs to those vehicles (but that has never been the case for fuel duty either).

What's next?

The scheme is not meant to start until April 2028, so the consultation responses will be the first check on the public mood for the proposal. There has already been some backlash, but that may be as much about the unpopularity of some general Budget measures around income tax as this measure.

There are plenty of questions beyond those in the consultation document. The scalability of this proposal beyond EVs and PHEVs being one of them, especially to heavy vehicles. I'll have to more to write about it in due course.

New Zealand's Parliament passes legislation to enable congestion pricing - unanimously (but the details will come later)

2025-11-12T18:53:00.002+13:00

In a possibly unprecedented step, the New Zealand Parliament has voted - unanimously - to pass legislation allowing for "Time of Use road pricing" to be enabled, based on proposals from local road controlling authorities in partnership with the NZ Transport Agency (NZTA) (the central government transport funding and regulatory agency, which is also the State Highway manager).

The Bill was introduced into Parliament by the three-party centre-right coalition government, and at the end was backed by the three leftwing Opposition parties as well. I believe this is the first time anywhere in the world that congestion pricing has received unanimous political support at a national level.

According to the press release from Transport Minister, the Hon. Chris Bishop:

Sitting in traffic wastes time, costs money, and drags down productivity,”

“Travel times in our major cities are up to 30 per cent longer than in comparable Australian cities, with Auckland congestion alone estimated to cost up to $2.6 billion by next year.

“Time-of-use charging is a common-sense tool that encourages people to travel at off-peak times or by other modes. It’s about keeping our cities moving - whether you’re a parent on the school run, a tradie heading to a job, or a truckie delivering exports to port.

“Time of use charging has been talked about in New Zealand for years and now we’re getting on with it. I am really pleased that the legislation to allow the establishment of time-of-use charging schemes passed Parliament unanimously. After years of discussion, it is great to see that all of Parliament is up for reducing congestion and improving productivity.

Ironically, there is next to no political appetite for such a policy in Australia in the near future, in any State or Territory.

Of course the legislation itself does not actually implement road pricing, but it does provide a framework for time of use pricing proposals to be generated, as a local-central government partnership, for approval by the Minister. The details as to what it will mean, in practice, will only come once the Minister of Transport has approved a road pricing scheme, following a proposal submitted by local and central government authorities.

Objective

Unlike some congestion charging schemes implemented elsewhere, the primary purpose of any proposals in New Zealand must be to relieve congestion, not raise revenue (although it is acknowledged that revenue will be generated). It is not designed to reduce emissions, but it is acknowledged that this is likely to be a benefit from it. It is fundamentally not intended to punish driving, but to reduce driving on specific roads at specific times so that traffic can flow more freely. It more closely resembles the objectives of the Singapore Electronic Road Pricing policy, than say New York or London.

This is not surprising, as New Zealand is one of the most car-oriented countries in the world. Auckland, which has 1.7 million people and has made the greatest progress in developing options for road pricing, may be the first to implement it. However, Auckland has highly dispersed travel patterns with around 80% of trips in Auckland undertaken by car (either as driver or passengers), with 18% by walking or cycling (and the remainder by public transport).

Timing

The legislation does not come into force for a year after Royal assent, and subsequent to that, the Minister can receive proposals for approval, amendment or refusal. Given the next New Zealand General Election must happen before the end of 2026, it seems unlikely that the Minister will receive a proposal in advance of that.

What's next?

Auckland Transport and subsequent to that Auckland Council are expected to make decisions on what sort of Time of Use road pricing scheme it wants to implement, with NZTA, and a proposal will need to be developed for acceptance by NZTA and then submitted to the Minister. Before that happens, there will need to be public consultation on the proposal, and at that point the pressure will be highest on local politicians as to whether they want to advance any proposal for implementation.

Other cities can submit their own proposals too. Wellington, Christchurch, Queenstown and Tauranga have all been mooted in recent years for congestion pricing on some scale, so it will be interesting to see which, if any, look to advance work on concepts for pricing in the coming year. Although much smaller cities and towns than Auckland, all have some congestion at peak times which can be severe for their size, and could benefit from road pricing.

Of course nothing is guaranteed.

The UK has had legislation enabling congestion charging by local authorities for around 24 years, and only Durham and Nottingham (the latter being a workplace parking levy) have implemented schemes under that legislation (London happened under specific legislation setting up Transport for London). New Zealand will not be quite the same, as the UK has generally enabling legislation (not requiring central government support), whereas New Zealand will see proposals go to the Minister for approval and will need to be a central-local government partnership. However, I would wager that it is more likely New Zealand will have a congestion pricing system operating sooner than any other UK cities will implement it.

New Zealand, appears on the face of it, to have a rather unique set of political willingness to enable congestion pricing, which is unseen elsewhere, but the reality of what any proposal will actually mean for motorists will come later.

Let's hope whatever proposals advance, that they can bring enough political and public acceptability to enable them to be implemented.

The Bill (which won't be law until Royal Assent) is available here.

(meanwhile it would be nice if the NZ Ministry of Transport updated its website)

Switzerland consulting on RUC for electric vehicles

2025-11-11T10:58:00.002+13:00

Switzerland has the longest record of any European country with distance based road user charging, being the first to introduce it (for heavy vehicles (GVW over 3.5 tonnes)) in 2001 with its LSVA system. The LSVA charges virtually all heavy vehicles by distance and weight class across all public roads in Switzerland (and Liechtenstein), although the first generation system used the tachograph as the primary measurement of distance, it used one of the first GPS On Board Units (OBUs) to support that measurement, including detecting where vehicles entered and exited the country. It is worth noting the LSVA is mandatory not only for Swiss registered heavy vehicles, but visiting heavy vehicles (with a manual odometer reading on entry and exit at the border for those not equipped with GPS approved OBUs, and a lump sum option for some classes of heavy vehicles).

Light vehicles were not subject to such a charge, but the vignette for use of the the motorway network applies to them (CHF40 per annum (~US$50), along with fuel taxes and registration fees as in most jurisdictions. This looks likely to change in the coming years for the same reasons as many other jurisdictions have been considering road user charges (RUC) - the inability of fuel tax as a way of charging for road use by electric vehicles (EVs).

Switzerland's Federal Council announced at the end of September that it is consulting on options to tax EVs, with the intention that it commence in 2030.

If successful, it is possible Switzerland could be the first mainland European country to introduce a light vehicle distance based RUC (given Iceland already has one).

Background

The press release from the Federal Council states that the Federal road infrastructure is 100% user pays, with the "mineral oil tax" being the main source of revenue for it. It pays into the National Road and Agglomeration Transport Fund and the Special Financing for Road Transport Fund with half of the fuel tax revenue also being general revenue to the Federal Treasury.

Tax on petrol is at CHF 0.7312 per litre (US$0.91)

Tax on diesel is at CHF 0.7587 per litre (US$0.94)

Any new tax on EVs would be expected to go to similar funds as the taxes on fuel. To implement such charges would require Constitutional Changes.

Options

The two options being considered are:

- Distance based RUC also based on vehicle weight (estimated to average at CHF 0.054 per km (US$0.067)

- Energy based tax on electricity used to charge EVs (estimated to average at CHF 0.228/kwh (US$0.028)

The proposed energy tax would apply to both public and private vehicle charging (which would raise questions about implementing and enforcing such a fee on vehicle charging at home).

Consultation

Documents on the consultation are available here (in German) and here (in French) and here (in Italian)

Consultation concludes on 9 January 2026.

Thoughts

I'm not a fan of levying the electricity used in EVs because it is fraught with the cost of implementing separate metering at homes primarily to recover a tax, and there remain issues around enforcement. It is also a highly inferior way of pricing road use, through a proxy tax, rather than one actually based around usage. Switzerland's long and successful operation of its LSVA system for heavy vehicles (which is not fuel specific) indicates it is possible to extend this to all vehicles, in an appropriate form.

Key to any distance charge when vehicles can cross borders is to provide an option to have distance measured by location, so this ought to be included but be optional. How this is to be accomplished is worth exploring.

Likewise, only having such a fee for EVs, and not considering plug-in hybrids or battery electric hybrids would be a mistake, as those vehicles pay much less fuel tax, and it would be seem appropriate to ensure they are charged appropriately for using the roads. Ultimately it could apply to all vehicles in due course, but this is

UK likely to introduce road user charging for EVs and hybrids, and it doesn't resemble National Road Pricing

2025-11-06T18:14:00.002+13:00

The Daily Telegraph, Financial Times and multiple other UK newspapers are reporting that the UK's Chancellor of the Exchequer, Rachel Reeves, will announce on 26 November 2025 that she is implementing a distance based road user charge (RUC) to apply to light electric vehicles (EVs), plug in hybrid vehicles (PHEVs) and battery electric hybrid vehicles (BEHVs) from 2028.

EVs will be charged £0.03 per mile (US$0.024 per kilometre), with "lower rates" for PHEVs and BEHVs, reflecting their use of taxed fuel. It is noted that current estimates are that the average petrol car pays around £0.06 per mile (US$0.048 per kilometre) based on fuel consumption. So the proposed EV rate aims to charge half the price of petrol cars, to help reflect the lower environmental impact and retain an advantage for such vehicles.

Fuel duty (officially called hydrocarbon oil duty) is at £0.5295 per litre (US$0.69 per litre). This is well in excess of fuel taxation in North America and Australasia, but not out of step with some countries in Europe.

Why?

25.4% of new light vehicle sales in the UK in October 2025 were EVs, 13.3% are BEHVs and 12.1% are PHEVs. So there is clearly an issue emerging of declining fuel duty revenue.

Estimated revenue from the new charge will be £1.8b (US$2.35b) per annum by 2031. This compares to around £24.8 billion in 2024 from hydrocarbon oil duty. In 2025/2026 alone it is estimated that around £300m (US$392m) is lost in hydrocarbon oil duty revenue from the growth in use of EV and hybrid vehicles. One estimate is that by 2029 that annual loss of revenue will be at £3.5b (US$4.6b) per annum, although later estimates are predicated on bans on sales of petrol and diesel light vehicles.

Note that hydrocarbon oil duty is not hypothecated for road or any form of spending. It is simply general tax revenue for Treasury.

Secondary to revenue is fairness. Without some form of road user charge, those who cannot afford EVs or hybrid vehicles are paying more to use the roads and contribute to government spending than those who do not.

How?

Articles so far indicate that the Driver and Vehicle Licensing Agency (DVLA), a branch of the Department for Transport (DfT) will be tasked with collecting the revenue, as it already collects the UK's annual vehicle registration fee (known as Vehicle Excise Duty - VED). DVLA checks compliance through Automatic Number Plate Recognition (ANPR) cameras matching vehicles to its database as to who has paid VED. The same could be done with RUC.

However, the details around implementation leave many unanswered questions. It is suggested vehicle owners will estimate future mileage driven and prepay for that distance, with credit given if overpaid. This suggests some form of independent recording of odometers, likely at annual vehicle safety ("MOT") checks, although these are not required for vehicles in the first three years of registration. Options include sending photos of odometer readings or the use of telematics technology to report distance, but none of this is clear as of yet.

Reaction?

The Conservative opposition is opposing it, even though it is likely that it would have to do something similar, but given the Labour Government has been doing badly in opinion polls for many months, it is clear this policy is likely to generate plenty of heat from political parties keen to weaken the Government. However, the next UK election is not due until August 2029 at the latest, so theoretically this should not be such a major consideration for now.

Hasn't the UK been here before?

Arguably yes. From the ill-fated Lorry Road User Charging project (which aimed to charge trucks by distance and vehicle class) replaced by the National Road Pricing project in 2005 which was shut down in 2007 due to public opposition. The differences between that project and this proposed charge are fairly stark though.

National Road Pricing aimed to reduce congestion by requiring all vehicles in the UK, regardless of fuel type, to be equipped with GNSS enabled on-board units, to measure distance varying by time of day and location, so that full network road pricing could be implemented. Although there were indications that some existing motoring taxes would be reduced, such as VED and hydrocarbon oil duty, there was vigorous public opposition. That opposition focused on how much people might pay, disbelief that existing taxes would be reduced by a reasonable amount, lack of belief that it would improve conditions for drivers and belief that money collected would be "wasted". Around 2 million signatures were added to an online petition to 10 Downing Street to stop the project (and it was subsequently shelved).

A more simple distance and vehicle class based RUC would resemble that which already exists in Iceland, New Zealand and four US states. Politically the question is how it might be sold to the public, as it is unlikely to matter too much that it is about raising revenue, but it may be to present it as ensuring drivers of EVs, PHEVs and BHEVs pay their "fair share" of the costs of maintaining the road network.

Issues?

There are plenty. From how distance measurement will be verified and reported, especially in the first three years of a vehicle's life, to whether payments will be annual or can be spread throughout the year.

Some other obvious questions:

How will distance travelled outside the UK be treated (Northern Ireland may present particular challenges)?
How will distance travelled by vehicles visiting the UK be treated?
Will this only apply to light EVs and hybrids, and if so, what about heavy vehicles?
Will motorists be able to pay in increments rather than annually?
Will there be options for fleet operators to report distance more efficiently than is needed for private individuals?

Another question will be whether the revenue will be hypothecated to contribute to spending on road maintenance and renewal, which would give a long-term funding stream to support long-term commitments to the renewal of roads throughout the UK. The UK Treasury is likely to oppose this, as it is philosophically opposed to any measures that reduce the flexibility of use of tax revenue, but the Department for Transport may take a different view, seeing the RUC as a user charge closer to a utility fee, so that it reflects a payment for the use of infrastructure (whereas hydrocarbon oil duty is simply a tax on fuel).

What's next?

Details are to come. Key to this will be how these and other design and policy questions are answered, and how it is sold to the public. Is it just a new charge to cover off those types of vehicles, or is there an expectation that it may be expanded to other vehicles over time? (the latter would seem to be very risky politically, given the ineptness of politicians and the civil service in getting public acceptance for anything like this in the past).

Maybe the big question is whether it is a first stage towards national road pricing? (it could be) Or is that going to be ruled out for now? Noting that this is going to apply across the UK, so what happens to the revenue in Wales, Scotland and Northern Ireland will be of interest to EV and hybrid vehicle owners in those countries.

Oregon inches forward with RUC for EVs from 2031 mandated (sort of)

2025-10-06T12:19:00.004+13:00

The Oregon Senate has finally passed a transportation funding bill that at last extends the scope of Oregon’s light vehicle road usage charging (RUC) system around 10 years after MYOREGO was launched in 2015.

From 2031, electric vehicle owners in Oregon will be required to be on RUC (it is currently an “opt-in” system) or pay an annual fee of US$340 (which means it isn’t a requirement). RUC for light EVs will be charged at US$0.02/mile (US$0.032/km).

The bill also includes:

• Increasing state gas tax from US$0.40 to US$0.46 per gallon (US$0.106 to US$0.122 per litre

• Increasing annual registration fees by between 66 and 90% (e.g. from US$43 to US$85 for cars)

• Increasing title fees (change of ownership tax) for car from US$77 to US$216

• Increasing registration surcharges for EVs and highly fuel efficient vehicles (intended to offset their lower gas tax consumption) from US$115 to US$145 per annum for EVs, and US$35 to US$65 per annum for cars with a higher than 40+ mpg rating (essentially hybrids).

• Doubles payroll tax used to fund public transport subsidies, for one year, from 0.1% to 0.2%.

It’s worth remembering Oregon has long has a weight-mileage tax – RUC for heavy vehicles, which also exempts those vehicles paying it from paying tax on diesel. This exemption is implemented by providing fuel retail outlets with proof of enrolment in the weight mileage tax programme. However, this is entirely separate from the RUC system for light vehicles.

Oregon was a pioneer for RUC in the US, running the first major studies and pilots from 2001 till 2013 and implementing the first revenue generating system on 1 July 2015. MyOReGO has been capped at 5,000 participants, but has been languishing in recent years with only 800 enrolled this year. In the meantime, Utah, Virginia and Hawaii have overtaken Oregon in the scale of their light vehicle RUC programmes in the US.

MyOReGO charges participants US$0.019 per mile instead of the registration surcharge, but has not been extensively promoted for some time. Now it will come into its own, but Oregon Department of Transportation will need to review the current system as it moves to mandate it for EVs. Fo

Around 2% of light vehicles in Oregon are EVs.

For Oregon, this transportation bill is one of despration as it struggles to fund essential road maintenance and operations such as snow removal and graffiti cleanup along highways. Half of the revenue will go to the state budget with 30% to countries and 20% to cities.

Opposition to RUC comes from the “Move Oregon Forward” group which advocates for “climate and equity” claiming it “unfairly penalises” EV drivers, although it is unclear quite the basis for this.

The Bill is seen by some as being a temporary fix, it is clearly not going to be enough, but is a start.

All in all, this is a positive move, although it is going to take some years before it is implemented and appears very unambitious compared to the likes of Hawaii which is mandating RUC for EVs from 2028. Given the many many times there have been attempts to advance RUC in Oregon over the past decade, it is clearly a significant step. Let's hope there is no further backsliding.

Australia pursues road user charging... again...

2025-08-27T19:21:00.006+12:00

There has been a lot of coverage in Australian media of the idea of a national road user charge (RUC) being applied to electric vehicles (EVs), mainly in the context of the Australian Government’s recent “Productivity Summit” (officially called Economic Reform Roundtable) which sought to bring together government, business, unions and other non-government organisations to generate ideas to reform Australia’s economy.

The themes of that event were:

Making our economy more productive.
Building resilience in the face of global uncertainty.
Strengthening the budget and making it more sustainable.

So it isn't just about productivity, but also economic resilience and strengthening the government's budget. This is where RUC comes in, it is all about budget sustainability.

In 2022, there were already forecasts of where declining fuel excise revenue would lead in Australia. By 2032, the loss would be around A$3.5b per annum in 2022 values.

Forecasts of Australian fuel excise revenue

Australia started with heavy vehicles

Australia has been interested in RUC for literally decades. From the early 21st century there was recognition of the limitations of the status quo, particularly for charging heavy vehicles. The key issues being the mismatch between what heavy vehicles are charged to use the roads (through fuel excise and weight based registration fees) and the supply of road capacity that matters to them. From the COAG (Council of Australian Governments) Road Reform Agenda and the subsequent Road Reform Project, it was established early on that productivity gains from RUC in Australia would only be fully realised alongside supply side reforms. In other words, the revenue generated needs to be spent on improving infrastructure for heavy vehicles, with transparency around ensuring universal service. From 2011 the Heavy Vehicle Charging and Investment (HVCI) project was run through till 2014, and although a lot of work was produced, it didn't deliver any reform. It cost around A$25m involved a Secretariat set up in Melbourne and over 75 reports were produced, but very little happened. It was a policy wonk's dream, but didn't bring the industry on board.

This was followed by the Heavy Vehicle Road Reform (HVRR) programme, which itself has lost momentum after several years. In 2015 the HVRR roadmap was agreed, which you can see below:

Australia's Heavy Vehicle Road Reform roadmap

It was an ambitious reform agenda, it would have seen heavy vehicles subject to direct user charges, the revenue of which would go into a hypothecated fund and investment from that fund co-ordinated based on the priorities of users and broader community service obligations (in particular, ensuring a basic level of service across the rural public road network). An independent economic regulator would set the RUC for heavy vehicles based on what is needed to pay to secure agreed service standards and capital investment, and road managers would be required to deliver those service standards.

In short, it wasn't about just RUC, but about roads operating more like a regulated utility for heavy vehicles. Progress on this has been slow with reporting indicating that only Phase One has been delivered (greater transparency on expenditure investment and delivery). Changes in Government, particularly Ministers, but also the change in Government in 2022 have seen this programme get a low priority. This is unfortunate, given the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) website indicates that the economic benefits of reform are "estimated to be between $6.5bn and $13.3 billion in net present value over 20 years (7% discount rate)".

It seems rather an omission for an economic reform roundtable to not ever utter a word about this.

Most recent progress saw the implementation of the National Heavy Vehicle Charging Pilot from 2019-2024, with one small scale trial and a three phase large scale trial. This was the largest pilot of RUC in Australia. It was primarily an engagement exercise with industry, but also tested multiple technical solutions as well as gathering data on portions of the heavy freight and bus sector to inform policy advice.

The potential to get better investment in the road network, including better results for truck operators in particular, by eliminating network bottlenecks (in particular weight-restricted bridges) and enabling wider network access perhaps should have got more attention. Given the agenda on road reform has been bipartisan by-and-large (with the COAG work being undertaken under both Coalition and Labor Governments, and likewise the HVRR work started under the Coalition continued under Labor. Note also that progress on this is dependent on support from States and Territories, but is highly dependent on Federal leadership.

However, HVRR and heavy vehicle RUC doesn't promise much progress on new revenue, so it got less state interest than RUC on vehicles that are not subject to fees to use the roads - EVs.

RUC for EVs

Although talk of RUC for EVs is being said to be in the context of productivity, if politicians and officials were honest, it isn’t really about that. At a stretch, there is an argument that EVs get “overuse” due to them not being subject to any fee or tax to use the roads. This means EV use, particularly in cities where there is a greater chance of alternative modes of travel, is excessive, and more efficient (and productive) use of road space may come if EVs are subject to a RUC that reflects a fair allocation of the costs of maintaining and developing the road network.

However, it is important to be clear that RUC for EVs is about government revenue, it does not have momentum for any other reason. It is about "strengthening the budget and making it more sustainable".

It's pretty obvious what this is all about, although it is also clear that the impact of EVs on fuel duty revenue is fairly minimal so far. There is much greater impact from more fuel efficient petrol vehicles, and in particular battery electric hybrids. Putting RUC on EVs (and plug-in hybrids) is a first step.

In parallel with Heavy Vehicle Road Reform, then Infrastructure Minister Paul Fletcher did try to get a study up and running on investigating options for RUC for light vehicles, focused on this issue. However, the Morrison Government abandoned this early, which was clearly a mistake.

Of course Victoria tried to do it at state level, but had its "RUC" overturned by a court case that ended at the High Court of Australia ruling it as unconstitutional. I wrote about that already. Meanwhile, New South Wales has passed its own legislation which will see a RUC commence in July 2027 for EVs, Western Australia also has similar legislation. So the pressure is on the Commonwealth Government to develop a national framework for what looks like a patchwork of State and Territory based RUC. That raises a whole host of issues.

I wrote about some here. Technology isn't one of them, neither really are the issues around how to implement it. The biggest issues are around governance including:

Whether there should be a Federal RUC that is one rate, and separate State and Territory RUCs?
What rules, if any, will apply to the use of revenue collected by either RUC?
Who sets the rates at Federal and State/Territory levels? Will rate setting be subject to any independent oversight (e.g. the National Transport Commission or the ACCC)?
What happens if/when RUC expands beyond EVs to include plug-in hybrids (which pay fuel excise) and battery electric hybrids? Shouldn't policy on this include all new powertrains, and consider what to do about very fuel efficient petrol powered vehicles?
How should heavy EVs be treated?
How should travel across State/Territory borders be addressed for State/Territory RUC?

What's next?

One of the outcomes of the Economic Reform Roundtable appeared some agreement to progress RUC for EVs. In an interview on the ABC TV current affairs show Insiders, Treasurer Jim Chalmers answered a question on the topic from Insiders host David Speers:

Speers:

I just wanted to ask you quickly on the road user charge that’s coming. You’ve got to work out the details with the states and territories. Is there a chance that motorists might have to pay both fuel excise and road user charge, or can you rule that out?

Chalmers:

No, our focus in road user charging is on electric vehicles. We’re not trying to work out ways to double‑tax internal combustion engines. We’re trying to make sure that people who drive EVs, increasing numbers of people who drive electric vehicles, are making a contribution to the upkeep of the roads that they use. It’s fundamentally about making the system a bit fairer.

We’ll take the time to get it right. The states are putting together an options paper for us to consider at our meeting, before long actually, the 5th of September, and so we’ll go through that.

The main point of contention at the reform roundtable was actually whether a road user charging regime focused on electric vehicles begins with heavy electric vehicles like electric trucks, and there’s some kind of sequence after that, or whether we be more ambitious earlier.

So, we’ll work through all of that. I don’t want to predetermine the discussions I have with the states or the considerations of our Cabinet, working with Catherine King and Chris Bowen and the Prime Minister and others. But we have made it clear, we do think a change is warranted here, and we’ll take the time to get it right.

Now it's important to remember that fuel excise duty in Australia is not hypothecated towards road spending, so the claim this is about a contribution to the upkeep of the roads is strictly not true (this is unlike fuel duty and RUC in the United States and New Zealand). He claims whether starting with heavy electric vehicles would be useful first step. I would hate to be a naysayer on this, but it frankly seems like a wasted effort. There are so few heavy electric vehicles that it would generate little revenue, and would teach state governments little about setting up systems for private individuals driving light EVs (and unless there is a programme for wider heavy RUC, it's not clear what the point of starting with heavy EVs is).

For what it is worth, there is merit in enabling both a national and a state/territory RUC rate, and to take some of the principles of HVRR in having independent price regulation, an investment programme based on what users need and a hypothecated fund that at least collects enough money to cover the costs of maintenance and renewal attributable to light vehicles.

Allowing States and Territories to set regulated RUC rates to cover a portion of their costs in maintaining their road networks would be a start, on condition they also collect a national RUC. A key issue will be how to address cross border travel with State/Territory RUC if location enabled distance measurement isn't mandated (and it is likely not to be, at least for light vehicles), but there are ways to do this seeing the experience in the US.

In the absence of any Commonwealth action, there is likely to be a NSW RUC from 2027 given the legislation that has been passed, and the eagerness for NSW to differentiate itself from the Vanderstock court case that brought down Victoria's Zero Emission Vehicle Fee.

There is a lot to do, but the direction of travel on RUC policy is positive, let's just hope that momentum isn't lost for this, as it appears to have been for heavy vehicle RUC.

It is understandable that Australia can't easily follow Iceland and New Zealand given scale, and New Zealand's long history in having RUC for diesel vehicles, but it can follow the United States which is pushing on with RUC at the state level as well as investigating it federally.

Meanwhile it ought to completely ignore the distractions of some academics who want this to be the introduction of full network road pricing. That would be the death knell to RUC as it has been in the UK, Netherlands and Finland.

(Disclosure: My employer Milestone Pacific acquired in 2021 by CDM Smith, advised the Department of Infrastructure, Transport, Regional Development, Communications and the Arts on the National Heavy Vehicle Charging Pilot. I was the PM for that advice).

Dubai converts Salik from an urban toll to a congestion charge

2025-08-20T01:06:00.001+12:00

On 1 July 2007 Dubai was an early implementer of what might have been seen as urban corridor road pricing, if it had applied pricing based on time and location. At the time it was Singapore, London and Stockholm that were the predecessors (although arguably Norway's toll rings were as well), with Dubai suddenly being the leader in the Middle East for tolling existing roads.

Map of Salik toll points

Salik was introduced as a corridor tolling scheme on major highways, not to pay for their construction or maintenance, but to raise revenue and improve traffic management. It was introduced using sticker tag toll technology, but the blunt pricing structure applied (with flat rate tolls on almost all routes) gave the strong impression that the Dubai Government bought the technology rather than a policy.

It was set up as a company to be the toll operator for the Emirate, generating revenues for shareholders. It is 75% owned by the Dubai Emirate sovereign wealth fund - Dubai Investment Fund. The remainder are held by private shareholders, as Salik is listed on the Dubai Stock Exchange.

There was a single rate for passing all toll points of AED4 (US$1.09) per passage with a cap of AED24 (US$6.54) until 2013 when the cap was lifted.

The key criticism of Salik was that it didn't do much for congestion, but rather saw traffic diverted onto parallel uncharged roads. Taxis were exempt from 2007 until 2013, which suppressed the impacts of pricing. When it was introduced, the Dubai Road Transport Authority reported a 25% reduction of traffic at one of the first charging points, with a 50% reduction in travel time, and another charging point reportedly had a 45% reduction in vehicle numbers. However, some polling indicated 70% of users were unhappy at the congestion diverted onto other routes. Although Dubai's recently built Metro had seen some trips (particularly taxi trips) shift mode, the impact overall has been minimal.

Salik has been expanded, with two new toll points added in 2024. Salik generated US$630 million in revenue in 2024. Detailed information on the system in 2024 is contained here.

That has changed substantially now.

On 31 January 2025, Salik became a congestion pricing based system with pricing that varies by time of day. As can be seen in the price schedule below it is now 50% higher in the AM and PM peak periods Monday to Saturday (with higher pricing during some periods in Ramadan), with no tolls 0100-0600.

The new time of use based pricing is expected to increase revenues by between US$16m- US$30m per annum. It will be interesting to see what results come from the peak charges, as there are few reports of the impacts so far.

Salik price schedule 2025

New Zealand's next steps to road user charging for all vehicles UPDATED

2025-08-07T15:59:00.005+12:00

I've written twice before (here and here) about the policy announcement from the New Zealand (NZ) Government around introducing road user charging (RUC) for all vehicles. This was a policy commitment by the National Party-led coalition government after it was elected in 2024.

On 6 August, Minister of Transport, Hon. Chris Bishop, has made a further announcement about this.

On the face of it, it looks like following Iceland to become the second country in the world to phase out fuel excise duty (FED) in favour of charging vehicles for road use by distance and vehicle class. For those who know about NZ's RUC system I don't want to go into detail as to how it works now (there is a Handbook with information here published by the NZ Transport Agency which manages the existing RUC system), but here are some very quick points for those unfamiliar with it.

NZ's RUC system

In NZ motor vehicles registered to use public roads either pay based on consumption of a taxed fuel (petrol/gasoline, LPG and CNG) or on distance based on vehicle class (RUC). In summary (I've omitted some details that are inconsequential, for the sake of pedants):

All RUC and Fuel Excise Duty revenue is hypothecated into the National Land Transport Fund (NLTF), which is used by the NZ Transport Agency (NZTA) (along with revenue from motor vehicle registration and licensing fees, and direct government funding from the Crown) to fund the National Land Transport Programme (NLTP), which is central government's funding of roads, public transport, walking and cycling infrastructure, rail and coastal shipping.
RUC rates are informed by a cost allocation model applying economic and engineering principles to future NLTP spending.

Depiction of how New Zealand's RUC rates are based on cost allocation

1.2 million vehicles in NZ are subject to RUC. This includes all heavy vehicles regardless of fuel source (vehicles with a Gross Vehicle Weight of over 3.5 tonnes) and all light vehicles that are diesel, electric (EVs) or plug-in hybrids (PHEVs). Around 80% of vehicles subject to RUC are light vehicles.
RUC raises NZ$2 billion (US$1.19 billion) per annum in net revenue, which is around 40-45% of the revenue to the NLTF. Fuel excise duty raises around the same from petrol powered light vehicles only.
The RUC system comprises prepaid distance licences, either paper or electronic. The rate structure for RUC varies by vehicle class and weight, based on a cost allocation model that allocates future spending based on the consumption of that spending by vehicle class/weight.
Over 95% of light RUC vehicles and a majority of heavy RUC vehicles are on the "manual system". This means regular checking of the paper RUC licence against odometer (hubodometer for heavy vehicle) readings, and purchases of new licences in blocks of 1,000kms or more either online or at retail outlets. Once purchased the new RUC licence is issued and is typically displayed on the vehicle windscreen in the bottom corner. At regular safety inspections, the odometer reading is recorded by the inspector and forwarded to NZTA to check against the latest distance licence.

Sample RUC distance licence as displayed on windshield

Over half of heavy RUC revenue is raised through eRUC system providers: Three companies offer eRUC, with electronic distance recorders that measure distance matched against locations, primarily for commercial vehicle fleets to more efficiently manage RUC and their vehicle fleets. These companies collect revenue for NZTA at virtually no cost to government, and attract commercial vehicle fleets due to the convenience of billing them for all vehicles, rather than monitoring and buying RUC licences for each vehicle. The three companies are telematics providers (EROAD, Teletrac Navman and RUC Monkey). The market for these systems was legally established in 2009.

Teletrac Navman electronic hubodometer

Early EROAD distance measurement device

Electric and plug-in hybrid light vehicles were added to the RUC system in 2024. This was around 120,000 vehicles with over 95% compliance.
Heavy vehicles are required to have either hubodometers or electronic distance measurement devices installed to be registered. This includes all heavy trailers, in order to capture variations in vehicle configuration that affect applicable RUC rates.

Hubodometer as required to be installed on all registered heavy vehicles

Distance travelled off public roads is not subject to RUC. Vehicles with eRUC automatically have off-road distance not measured to avoid consuming RUC, owners of vehicles on the manual system may apply for refunds through a manual (and time consuming) process. The same applies to petrol powered vehicles operating off of public roads and any other equipment using petrol. It is possible to apply for refunds of FED, but many do not do so because of the time and complexity required.
NZ has an Emissions Trading Scheme, which sees a cost of CO2 emissions included in the price of fuels used domestically in NZ. FED has never been designed to be an environmental tax, noting there is no FED on diesel. FED is a proxy road user charge.

What's the objective?

Revenue sustainability and fairness.

While FED is a very cost effective way of raising revenue, the variations in what petrol vehicle owners pay are considerable based not only on engine size but engine type. Although EVs are on RUC now, as are PHEVs (at a reduced rate to reflect their use of petrol), battery electric hybrid vehicles (BEHVs) and small fuel efficient petrol vehicles are paying much less per kilometre to use the roads compared to the average petrol powered car. There are already 350,000 BEHVs effectively paying half as much as all other light vehicles to use the roads.

In future years, rates of RUC and FED would both need to increase to reflect inflation and the Government's ambitions for significant capital spending on improved roads. While tolls are to be used to help with some projects, they will not be able to be applied to many capital improvements. Raising FED creates a distributional impact on those unable to afford new vehicles that are more fuel efficient or have different drivetrain technologies such as EVs, PHEVs or BHEVs. FED is simply no longer fair compared to RUC which can apply a flat rate across all light vehicles to reflect their use of the road network and the spending from the NLTP that benefits them all equally.

Putting all vehicles on RUC means that changes in vehicle technology won't affect revenue and future RUC increases will apply equally to all light vehicle owners, reflecting spending on land transport infrastructure.

What's going to happen?

RUC legislation will be amended:

to remove the requirement for paper RUC licencesa and prepaid licences. This will enable RUC to be billed based on past travel, rather than future distance travelled.
to enable use of telematics systems already built into vehicles as a means of measuring and reporting distance travelled, rather than simply the odometer or a third-party device.
Separating NZTA's role as regulator of electronic system providers and provider of the manual RUC system, to remove conflict of interest in encouraging competition in the supply of RUC service provision.
Allow tolling and future congestion pricing services (time of use charging in NZ parlance) to be bundled with RUC for those choosing to use electronic system providers, to avoid the need for multiple accounts.

The intention is that this should enable a wider range of technical and commercial options to measure, report and bill for RUC. With the existing market base of around 1 million vehicles on the manual RUC system, the potential should be there for new providers and technical solutions that are cost effective.

The expectation is that by 2027 a next generation of RUC providers and options will be available supplied by private companies, to attract existing RUC users from the manual system and make it easier to transition other light vehicles onto RUC.

No deadline for the RUC transition has yet been set, which is sensible as there are some major issues to work through.

It appears that the manual system will remain and that location will NOT be mandated as part of an eRUC system. This should help address concerns about privacy.

Unanswered questions

While there is a lot of speculation as to what will happen and when, some of the big issues remain to be worked out in the coming years. These include:

Will the manual RUC system remain in some form? There is an argument to retain it for vintage vehicles and some older vehicles that are not suited for third party devices for various reasons. Furthermore, retaining the manual system will address a raft of privacy concerns for many people, even if it is modernised to be based on reporting distance travelled rather than prepaid distance. On 7 August the Minister indicated that a manual option will remain for those who want it.
How will the transition be structured? Vehicles using a specific fuel can either be switched all over overnight or in groups, while having some means of exempting, refunding or crediting FED as long as it remains. There are merits and costs in both approaches, and there should be flexibility around FED to facilitate the latter by technical means.
Will RUC remain a single national rate for the time being? The merits of eRUC which includes location are minimal for light vehicles that don't go off road, so the transition raises questions as to wider reform of pricing roads. On 7 August the Minister indicated that location measurement would not be mandatory. Given the commitment to more tolls and time of use charging, location will be an option for those wanting to use eRUC as an interface to such systems, but they will remain separate policies. Existing governance structures are almost certainly not going to be able to deliver more disaggregated road pricing by location and time of day efficiently, and there are reasonable concerns as to whether future government may use it to act punitively against certain classes of vehicles in specific locations. Not mandating location should ameliorate those concerns.
How is non-compliance going to be managed? There are obvious merits in treating road as a utility, but there are costs too which are born by utilities. These are around customers at the margins of being able to pay invoices and those who seek to evade the system altogether (along with vehicle licensing and safety inspections). Existing RUC compliance is focused on heavy vehicle compliance generally, with one means of checking light RUC compliance, this is unlikely to be adequate for a system that will have 95% of its customers as private vehicle owners.
How will the market for eRUC service providers be adequately incentivised? It is not a brand-new market but the market for eRUC for private vehicle owners is almost non-existent under current settings. Some mix of mandating RUC and allowing a wholesaling of RUC may provide the answer to this, but other options may need to be considered, such as revenue sharing.
Will OEM (Original Equipment Manufacturer) telematics systems be opened up to enable use of data for RUC? Whether by OEMs or by legislation, being able to unlock the potential for these systems (which raises some issues in itself) for service providers to bill vehicle owners, will be important in maximising convenience, compliance and minimising costs.

Assuaging concerns

There may be some work to be done in convincing the public that FED will be abolished and people won't be paying twice. Associated with that will be concerns about RUC being used to raise much more revenue at higher rates, although this was entirely possible with FED (and for many years part of FED revenue was general Crown revenue not hypothecated to the NLTF. This was abolished in 2008 as the Government spending on land transport had been increased considerably, and there had been a successful political campaign for some years to end FED revenue being split between the NLTF and the Crown. One way of assuaging concern about rates would be to review and update the Cost Allocation Model used to inform the setting of RUC rates, so that it is at least seen as being based on economic calculation to generate revenue for specific land transport spending and not simply political whim.

There is also some concern about privacy, if everyone is required to have an electronic device or system that measures and reports distance by location (which isn't essential if RUC is going to remain a single national rate for some time). Other concerns are around use of data, especially the idea it might be used for speed enforcement. While it seems highly unlikely that the current centre-right government would want to implement such a policy, it is not inconceivable that a different government which seeks to rigorously pursue a policy of zero road fatalities and to discourage private motoring might use such a system punitively. The current eRUC system allows fleet operators to be notified if their drivers exceed speed limits, but this is entirely voluntary and does require real time tracking, which is not cheap to implement given data requirements (and is typically applied by fleet operators to ensure that their expensive vehicles and cargos are being protected). RUC legislation ought to be drafted to ensure that it addresses concerns around privacy and scope creep.

Ultimately this is a revolutionary move, far moreso than any of the US states moving towards RUC for EVs (with the possible exception of Hawaii which IS looking to transition all light vehicles onto RUC by 2033), and more than any countries in Europe, which all struggle to implement RUC on light vehicles. If successful, it will certainly put NZ at the leading edge of RUC internationally.

All of this at the same time as NZ is progressing legislation to enable congestion (time of use) pricing (see the Bill for that here), which is expected to be implemented using automatic number recognition technology in the foreseeable future.

UPDATED: Following a TVNZ news story which included an interview with Hon. Chris Bishop on 7 August which provided further elaboration of his intention, several elements of this post have been amended.

New York's Lower Manhattan toll has reduced congestion

2025-07-31T17:32:00.004+12:00

New York's congestion charge is of course ground-breaking in the United States as the first application of congestion pricing to all lanes on an existing road (of course express lanes have offered the choice of priced lanes in many cities and on many routes, and there are toll roads with higher peak charges, but congestion pricing on previously untolled roads is new).

The scheme has been in place now since 5 January, so is well bedded in. It is timely to look at the results so far. It is designed primarily to raise revenue, which is why charges apply 24/7 (albeit with a significant discount during 2100-0500 weekdays and 2100-0900 weekends), but that doesn't stop there being a noticeable demand impact. It should encourage both mode shift and some trip consolidation (fewer motor vehicle trips), and also some time shift close to the 0500, 0900 and 2100 time period cutoffs.

The conclusion after six months is that traffic flows better, transit patronage is up and there are considerable net revenues being generated from vehicles paying the charge (which unhelpfully is called a toll).

The National Bureau of Economic Research Digest reports an 8% increase in the speed of car trips within the zone and to the zone, with a 2.5% increase in speeds from the zone.

New York City traffic speeds

It also noted a 15% in average CBD speeds with a 20% increase in weekday afternoons (1300-1700) and 25% increase in weekend evenings (1500-2100).

The MTA has published data about vehicle entries and bus travel times.

In January, there was an 8% reduction in vehicles entering the charged zone compared to the baseline of the previous year. By June 2025 the reduction in vehicles entering the charged zone was at 14% compared to what was forecast had charging not been in place. It was down 10% in May, 12% in April and 13% in March. This is an ongoing trend, which should result in higher traffic speeds as well as improved air quality.

MTA also reports bus speeds. These indicate a modest increase overall compared to previous years, but the effects vary considerably when disaggregated to specific routes. Route B39 sees a 30% increase in speeds, M1 hardly any change, as it is obviously dependent on the impacts on specific routes.

Route M1 average speeds by month

Route B39 average speeds by month

With a flat fee for all routes, it is obvious some routes will see significant improvements, while others will not (either because they are much less congested anyway, or demand elasticity is different for different origin-destination pairs).

Transit use has gone up. Subway patronage is up 6-8% per month. Long Island Railroad, Metro-North Railroad and bus patronage are also up by similar percentages.

The PATH (subway from New Jersey) has seen patronage increases in all but one month since January of 7-11% per month.

Congestion pricing tracker website is more informative, as you can compare the driving times for a wide range of routes into the zone by time of day and day pf the week.

The Lincoln Tunnel has clearly sees reduced travel times during the day, but the Queens-Midtown Tunnel (which was already tolled) has seen little impact. Arguably in the mornings, there has been an increase, because those paying for the toll of this (and multiple other crossings) have the toll as a credit towards the congestion charge. This suggests some shift in chosen crossing to the tunnel because it is not longer punitively priced compared to the other crossings.

Lincoln Tunnel travel times

Queens-Midtown Tunnel travel times

Some of the data shows time shift around peak/off peak charges, but largely involving a slight increase before and after the change in charging times.

The website's conclusions so far are:

Overall, the policy has mostly reached its intended effects, at least directionally.

Traffic delays have decreased significantly across the board within the congestion zone, on tunnels and bridges to the zone, and even in the surrounding boroughs.

While time saved in traffic depends significantly on the route one takes, it has ranged from a few minutes shaved off an evening commute to a decrease of thirty minutes or more. Official MTA data shows tens of thousands fewer vehicles are entering the zone, resulting in reduced crashes and injuries.

Environmental effects have also been apparent: honking and noise complaints have more than halved in some areas of the Congestion Zone, and air quality has reportedly improved.

While long-term effects of Congestion Pricing will continue to evolve over the months and years to come and vary significantly based on individual experience, our current data paints an encouraging picture of the policy’s effectiveness.

Of course reduced travel times/ increased speeds are an obvious measure of success. Those paying are now getting a better experience, with improved journey times and less energy wasted (with lower emissions). However there is a lot of additional data needed to form a complete picture of the impacts. What I would hope to see by early 2026 is:

Route by route average traffic speeds comparing free flow, pre-charging and post-charging
Data on what happened to the reduced traffic (mode shift, higher vehicle occupancy, reduced number of trips, diverted trips) based on surveys
Compliance rates (proportion of vehicles paying the charge compared to those required to pay)
Complaints rates (numbers of formal complaints about charges)
Impacts on businesses located within the charging zone, including those relatively close to the 61st Street boundary (some may be winners, some losers if the charge deters some customers)
Data comparing local air quality within and just outside the charging zone before and after the charge was introduced

Will this encourage more congestion pricing in the USA?

It's too early to tell, but clearly the sky didn't fall in NYC, and there are some measurable and noticeable improvements in travel times and changes in behaviour. However, lower Manhattan is fairly unique in the United States. With the possible exception of downtown Washington DC, no other US city has a concentration of trips and employment so focused on its downtown that is responsible for much urban congestion (and lower Manhattan's geography lends itself to charging).

The big mistake will be thinking that the answer for each city will be to implement a cordon as seen in New York, particularly one that runs 24/7. This is the sort of nonsense that was seen when London was introduced, as it was assumed by some that every city just needed an area charge, but no others have ever been implemented.

New York is, so far, a success. It faces its charges being increased in future years to sustain those benefits, noting New York was introduced at a considerably lower rate schedule than was originally proposed as seen below. In 2028, the rates are going up by around a third on average, and another 25% in 2030 to meet the revenue targets desired. The impacts of both of those increases will be interesting, because it is likely they will be much more modest than the initial impact, but they may also prove to be politically more difficult.

New York congestion charge rate schedule page 1

New York congestion charge rate schedule Page 2

Hawaii launches the fourth light RUC programme in the United States, with much more to come

2025-07-08T13:13:00.001+12:00

Phase 1

1 July saw the launch of the fourth US state (following Oregon, Utah and Virginia) to implement an operational RUC system for light vehicles (as distinguished from the five states with weight-mileage taxes for heavy vehicles). Known as HiRUC, it follows two pilots and extensive consultation, and reflects the relatively high take-up of EVs in the state of Hawaii (3.5% of light vehicles are battery electric vehicles (BEVs) or plug-in hybrids (PHEVs).

HiRUC affects around 38,000 vehicles, being EVs with a gross vehicle weight of 10,000 pounds or less (around 4.5 tonnes).

Phase 1 of HiRUC provides a choice for owners of battery electric vehicles (BEVs) to either pay an annual fixed fee of US$50 or to pay per mile at a rate of US$0.008 (up to a cap of US$50). In effect, the RUC option means those who are likely to drive fewer than 6250 miles per annum can pay less.

The system will be implemented by odometers being checked at annual vehicle safety inspections and reported to the Department of Transportation. BEV owners will receive an invoice for RUC at the time of their annual registration renewal. The RUC invoice will be based on the vehicle safety inspection reading of the odometer. This will be the first US RUC system based on odometer readings at safety inspections. Vehicle at the time of re-registration will choose whether to pay the US$50 or go onto RUC.

Payment for RUC is collected at the same time as the registration renewal.

New BEVs will be placed on the flat fee at first registration, and owners can choose to remain on it, or switch to RUC after their first safety inspection.

It's important to note that this is meant to resemble the State Gas Tax, not the US Federal Gas Tax. Noting there is also County Gas Tax (and separate work underway to consider how counties could have their own RUC collected through the same means).

Vehicle owners that select a flat fee can change onto RUC at their next renewal (those on RUC have no need to, as their payments are capped at US$50).

Pilots

Before implementation, the Hawaii Department of Transportation undertook studies and two key pilots. The first was in 2019-2020 when 359,659 residents received Driving Reports comparing what they paid in fuel tax (based on miles driven and the average vehicle efficiency of their vehicle) to what they would have paid had there been RUC at the same level. This was an important start to engaging with the public on RUC as a replacement to the gas tax.

This was followed up by a pilot with 2,129 participants including a range of mileage reporting options. That included smartphone odometer imaging and plug-in devices (into OBD2 ports) with and without GPS location identification. Odometer image capture was most popular.

An archive of the previous work is available here, along with a factsheet about the new system and the relevant legislation.

Phase 2

From 1 July 2028, the fixed fee will be scrapped and all light BEVs will be required to be on HiRUC. Work on designing that transition is underway, as this will be the first mandated light RUC system in the United States (all others still have the choice of an annual flat fee or RUC). The obvious question will be whether the US$50 cap will remain in place, noting there is no such gap for the State Gas Tax.

Beyond 2028

Act 222 (the legislation introducing HiRUC) requires that HDOT to develop a Long-Term Transition Plan to transition all light-duty vehicles to RUC by 2033. So placing all BEVs on RUC is very much a step towards a much bigger shift. This will consider when and how to include PHEVs and other hybrid vehicles, but also all gasoline powered vehicles and the future of the State Gas Tax. Noting this is only for light vehicles, so medium and heavy vehicles will have to wait. The State Gas Tax can't be scrapped when those vehicles are paying it.

Still, no other US state has indicated a proposed deadline for transitioning ALL light vehicles to RUC. Only Iceland and New Zealand have such policies (albeit in both cases ALL vehicles), and almost certainly Iceland will be the first to achieve it.

Hawaii has a range of advantages. Its islands are small, there is not only no international nor inter-state traffic, there is very little inter-county traffic as there are no roll-on/roll-off ferries to enable people to take cars conveniently between the islands. Nevertheless, while there are stereotypes about Hawaii operating more slowly than the continental United States, that is all they are. Hawaii has shown that with some clarity of objectives, solid engagement with the public and stakeholders, and clear policy analysis around options, RUC can be implemented relatively swiftly and efficiently.

US Federal Highways Administration terminates agreement authorising New York congestion charge

2025-03-04T17:30:00.001+13:00

On 20 February 2025 the Executive Director of the US Federal Highways Administration wrote to the Commissioners of the New York State and City Departments of Transportation and the President of the MTA as follows, essentially requesting that the New York congestion charging scheme cease to operate from 21 March 2025 on "Federal aid highways":

Dear Commissioner Dominguez, Commissioner Rodriguez, and President Sheridan:

I am writing pursuant to Secretary Duffy’s February 19, 2025, letter terminating the November 21, 2024 Value Pricing Pilot Program (VPPP) Agreement under which the Federal Highway Administration (FHWA) has approved the implementation of tolls as part of the New York’s Central Business District Tolling Program (CBDTP). The Secretary’s letter stated that the FHWA will contact the New York State Department of Transportation (NYSDOT) and its project sponsors, Triborough Bridge and Tunnel Authority (TBTA) and New York City Department of Transportation (NYCDOT), to discuss the orderly cessation of toll operations under the CBDTP.

In order to provide NYSDOT and its project sponsors time to terminate operations of this pilot project in an orderly manner, this rescission of approval and termination of the November 21, 2024 Agreement will be effective on March 21, 2025. Accordingly, NYSDOT and its project sponsors must cease the collection of tolls on Federal-aid highways in the CBDTP area by March 21, 2025. Please work with Rick Marquis, the FHWA’s New York Division Administrator, to provide the necessary details and updates regarding the cessation of toll operations.

A Federal aid highway covers all Interstates and the Primary road system (FAP) and Secondary road system (FAS), so does not cover all roads within the zone, but it does include some.

This follows a letter to the Governor of New York from the Secretary of Transportation expressing concern about the scheme's burden upon people in New York and New Jersey:

I share the President’s concerns about the impacts to working class Americans who now have an additional financial burden to account for in their daily lives. Users of the highway network within the CBD tolling area have already financed the construction and improvement of these highways through the payment of gas taxes and other taxes. The recent imposition of this CBDTP pilot project upon residents, businesses, and commuters left highway users without any free highway alternative on which to travel within the relevant area. Moreover, the revenues generated under this pilot program are directed toward the transit system as opposed to the highways. I do not believe that this is a fair deal.

The use of revenues is clearly a key issue, but the misconstruing of the need for a fee to enable people without a free alternative is unfortunate.

I have concluded that the scope of this pilot project as approved exceeds the authority authorized by Congress under VPPP.

This is hotly debated. The Secretary's claims are that the legislation enabling the scheme did not envisage cordon pricing, compared to conventional tolls. The other key claim is that as the scheme is primarily designed to raise revenue, not reduce congestion, then it is outside the scope of the Value Pricing Pilot Program.

By contrast, the Governor of New York, Kathy Hochul is pushing back. Here is her speech to the MTA Board. and her statement on receipt of the letter from the Secretary of Transportation.

Her main claim is that it is not for the Federal Government to stop New York from introducing pricing on its roads. She is litigating against the claim of the Secretary of Transportation.

So the battle for New York congestion charging goes to the courts...

Iceland confirms it will be the first country to fully replace fuel tax with distance based road user charges

2025-02-26T19:00:00.001+13:00

Early last year I wrote about how Iceland was the first country ever to mandate a distance-based road user charge for electric vehicles and plug-in hybrid vehicles, which it successfully implemented just over a year ago. Iceland also passed legislation to enable RUC to apply to all light vehicles.

The current Icelandic RUC system is depicted here on the official website, displaying the rates for EV/Hydrogen vehicles and PHEVs,

The rates are ISK6 (US$0.043) for EVs/Hydrogen and ISK2 (US$0.014) per kilometre for PHEVs.

Iceland's public broadcaster, RUV, has reported (Icelandic) that the system is now to be extended to other vehicles according to the Minister of Finance, and it will apply from the middle of 2025.

Coinciding with this, fuel tax will be abolished. There are no key details from the report except that the Minister of Finance, Prime Minister and Transport Minister are working on arrangements to implement it, and it will be similar to what has already been introduced.

Iceland's `"Roads to the Future" site is quite good on data and more information about the concept, but major questions remain unanswered. The site indicates that weight will matter, which of course is important once vehicles have a gross maximum allowable weight of over 3.5 tonnes, noting Iceland already has a distance tax for vehicles over 10 tonnes.

No doubt this will be revolutionary, and by abolishing the fuel tax (although there may remain a carbon tax to reflect CO2 emissions, it will be the first country to abolish motoring tax on fuel altogether (the only other example even close to this is New Zealand having no such tax on diesel, in exchange for having road user charges on all diesel powered vehicles).

Some of the big questions are as follows:

Will the rate for all other light vehicles be the same as the EV/Hydrogen vehicle rate? (seems logical)
Will the rate for PHEVs rise to the same level as other light vehicles?
What will the rate structure be for vehicles from 3.5 tonnes to 10 tonnes?
What will happen to the heavy vehicle distance tax? Will it be raised to reflect abolition of the tax on fuel, or will it be replaced with the new RUC system as well?
What efforts will be taken to minimise fraud with a system based on reporting odometer use?
What have been the results of the introduction of RUC on EVs, PHEVs and Hydrogen powered vehicles so far? Any issues with non-compliance or fraud?
Will the system be entirely based on manual reporting of distance (using mobile phones) or is Iceland open to more technologically sophisticated options to automatically report distance (particularly for heavy vehicles).
Will it apply to motorcycles as well, and if so will it be using the same system?
Will there be exemptions for travel off of public roads?
Is revenue going to be hypothecated to spending on roads (as fuel tax was not)?
Will future rate setting be informed by a cost allocation study/model, or by another approach that links prices to costs or another economic basis for price setting?

Principles of road user charging design in Iceland

Iceland is a small country with only 373,000 people and 12,898km of roads, but high ownership of private cars. 50% of newly registered cars are EVs or PHEVs, with over 18% of the light vehicle fleet now consisting of such vehicles.

It's notable that the Icelandic Government has calculated that with the new system it still will cost more to own and operate a petrol powered car than an EV. Notable because it is a key concern that introducing RUC will disincentivise purchases of RUC.

The taxes listed in Icelandic below are from left to right on the legend:

- Kilometre Tax

- Fuel tax

- Carbon Tax

- Energy cost

- Annual vehicle fee

- VAT

There is a presentation due to be made at the March 2025 Brussels RUC Conference, arranged by Akabo Media, on Iceland's system. It will be interesting indeed to see if there is anything to add.

Denmark successfully introduces RUC for heavy trucks, Netherlands will be next

2025-02-26T14:44:00.003+13:00

To little fanfare, on the 1st of January it was mandatory for trucks operating on national highways and some municipal roads, in Denmark, with a gross maximum weight of 12 tonnes and above, to pay a road user charge (called a truck toll in the EU) based on distance.

The main website for the charge is here.

It applies to all trucks, whether registered in Denmark or not, and by applying to all national highways and some municipal roads, it means around 10,900km of road is subject to the charge.

Denmark heavy truck RUC road network until 2028

However, this is only the first stage in a programme to introduce RUC to all vehicles over 3.5 tonnes, on all public roads in Denmark.

The stages are as follows:

1 January 2025: Trucks with GVW of 12 tonnes and above travelling on all national highways and some municipal roads.
1 January 2027: All trucks (GVW of 3.5 tonnes and above) travelling on all national highways and some municipal roads.
1 January 2027: All trucks (GVW of 3.5 tonnes and above) on ALL public roads (around 75,000km).

The system parallels withdrawal of Denmark from the Eurovignette programme, which charges trucks on a day, week, month or annual basis to operate in specific countries (now just Sweden, the Netherlands and Luxembourg). Of course the Eurovignette only applies to trucks 12 tonnes and above. The charge will be new to vehicles below that.

Rate structure

There are three weight categories for 12 tonne and above:

12-18 tonnes
18-32 tonnes
32-44 tonnes

Fees vary by CO2 emission class, with surcharges for operating in low emission zones. This is primarily a charge based on changing behaviour for environmental purposes, and is less about infrastructure costs.

Four of the five CO2 emission classes have charges that vary by registered maximum allowable weight of the truck combination. The zero emission class has the same charge regardless of size - being DKK0.13 per kilometre (US$0.018 per km). This is indicative of how much importance is being given to encouraging zero emission trucks.

The highest fee is for trucks over 32 tonnes at the highest emissions category, at DKK1.1 per kilometre US$0.16 per km).

How is distance measured and reported, and how is it paid?

Denmark has been technology neutral and has enabled an open market in EETS service providers for its system. Three companies to date are registered to offer RUC collection services:

BroBizz (a subsidiary of Sund & Bælt Holding A/S, the Danish SOE responsible for setting up the entire system)
Telepass (a long standing Italian EETS provider) and
ØresundPAY (the service provider for the toll crossing to Sweden)

All three provide their own GNSS enabled OBUs (on board units) to be installed either professionally or by the vehicle owner, in their vehicles. One provider includes the ability to use an app to measure and report distance. The market is open, there could be more providers (and likely will be) in the years ahead.

Occasional users can buy a "toll ticket" which is literally a permit to travel a set distance within Denmark on specific roads, and is designed for trucks making rare trips into the country. Toll tickets are only available digitally.

The system is enforced with a network of Automatic Number Plate Recognition (ANPR) cameras fixed by the roadside, and also a fleet of enforcement vans which check whether the number plate of a truck is registered either with a service provider or a toll ticket has been paid for it.

Non payment is subject to a fine of DKK4500 (US$634).

What's significant about Denmark?

Besides being another country in Europe with heavy vehicle RUC, Denmark is showing how a RUC system can be introduced entirely serviced through an open market of service providers, with a technology-neutral approach. GNSS OBUs, OEM telematics or mobile phone apps might all be used. Denmark is also introducing heavy RUC on all roads, which is rare in Europe. Only Switzerland and Iceland have RUC systems that apply to distance travelled on all roads (although the Belgian heavy RUC system does measure distance on all roads, it applies a zero tariff to many of them).

The only significant negative news is that some truck operators believe that some operators have been incorrectly fined.

What about light vehicles?

Denmark has already been running a light vehicle road pricing trial based on distance. time and location. It was focused not just on pricing EVs, but on managing congestion. Two concepts are being tested - distance-based pricing and time-based (time being the duration of time driving). Both with location and time-of-day elements to it. 2,200 participants in the pilot.

It started in July 2023 and ends in July 2025. So there will be considerable interest in the outcomes of that trial. It will be evaluated subsequently and the results will no doubt inform policy discussions on road user charging in Denmark. It will be helpful that the heavy vehicle system is operational and will have been proven to work effectively.

Who's next?

The Netherlands will have a heavy vehicle RUC system from July 2026, it will also replace the Eurovignette as well as part of the motor vehicle tax for such vehicles ( a fee chargeable every three months similar to registration). It will be for all trucks 3.5 tonnes and above and only on major highways and some major local roads.

The Dutch system will require OBUs to measure and report distance, and will use DSRC as the enforcement technology (communicating with roadside and mobile enforcement units to check if vehicles have operating OBUs).

A consortium called "Triangle" led by Via Verde of Portugal (including Ascendi and Yunex) has been contracted to introduce the system, supplying OBUs and the remainder of the system, although it will be open to competing service providers. Via Verde will be the "base" supplier of account management services to those not using EETS providers

Vitronic has been separately contracted to provide the enforcement infrastructure (roadside and mobile). The core back office system is being owned and operated by RDW (the Netherlands Vehicle Authority, which is responsible for the RUC system).