Emissions Road Rage

As environmental policy, public transportation incentives don’t work. Road pricing is the clear alternative.

Motivated by the threat of climate change, local governments across the United States are striving to reduce emissions. Indeed, compared with federal gridlock, cities provide a source of hope for climate activists. Municipalities as disparate as Seattle, Pittsburgh, and New Orleans, for example, committed themselves to upholding the U.S. Paris Agreement climate pledge even after the Trump administration announced a U.S. withdrawal from the pact in 2017. In 2020, the two largest cities in Texas, Houston and Dallas, submitted climate plans of their own, showing that the city-first idea has legs even in a part of the country that has relied historically on fossil fuel production for its economic development.

One specific policy area in which local governments have frequently pursued emissions improvements is transportation.

The standard municipal playbook for making environmental gains through transportation policy is to boost public expenditures on mass transit, often in the form of subsidized fares or investment in projects like new light rail lines. The 2017 Framework for Local Action on Climate Change published by the Center for American Progress (CAP) exemplifies this approach, urging cities to “ensure access to affordable and clean transportation,” “expand public transit,” and “increase the use of low- and zero-emissions rapid transit and electric buses.” CAP rightly notes, “on a person-per-mile basis, subways and metrorails produce 76 percent less greenhouse gas emissions than a single-occupancy vehicle, the most common mode of commuting, while light rail produces 62 percent less.”

The CAP framework, however, falls prey to a common fallacy, that enticing erstwhile drivers to mass transit through subsidies will necessarily and durably reduce roadway emissions. The problem with this seductive expectation is that lowering the cost of transit does nothing to raise the cost of driving—and, in fact, may temporarily lower it as well. In practice, when public transit incentives draw drivers to transit they also free up road space and lower the time-cost of driving. The unintended consequence is to elicit new trips by car from other people—trips that would not have been made in the absence of the transit incentives—and to render moot ostensible emissions improvements.

This is a corollary of the phenomenon known in the urban planning profession as induced demand. When new roads are built or new lanes are added to existing roads, demand rises over time to fill the new space, thereby neutralizing congestion relief and, with respect to emissions, spurring an overall increase. A meta-analysis-generated rule-of-thumb, says planner Jeff Speck, is that “a 10-percent increase in lanes miles induces an immediate 4 percent increase in vehicle miles traveled, which climbs to 10 percent—the entire new capacity—in a few years.” An extension of Speck’s rule-of-thumb informs us that drawing some motor vehicle users off the roads with transit incentives will lower the time-cost for others and thus undermine the effectiveness of transit inducements as emissions-saving tools.

The result of our failure to account for this insight are that the roads remain car-clogged despite many existing transit incentives and continued public investment and that transportation is entrenched as the largest sectoral contributor to U.S. greenhouse gas emissions, at 29 percent.

There is a solution, however, that could pull us out of this induced-demand trap: road pricing.

In essence, a road pricing regime charges a fee for use of a roadway network, particularly during times of high demand. While road pricing is a seemingly narrow policy, the benefits can be wide-ranging. Road pricing is a more holistic strategy for improving transportation emissions and efficiency than the piecemeal subsidies for mass transit and electric vehicles suggested by CAP. It has already proven useful in numerous cities across the world and the C40 Cities Climate Leadership Group deems it “essential to driving a modal shift” from cars to other forms of transportation.

How Does Road Pricing Reduce Emissions?

The most common argument for road pricing is that it will alleviate traffic congestion, thereby saving people time and facilitating smoother commerce. In addition to those important benefits, road pricing also reduces emissions—both of greenhouse gases and of local air pollutants—in several ways.

First, pricing our roads would put downward pressure on the number of vehicles using them by prompting potential road users to factor the new cost into their daily decisions and, subsequently, to reduce at the margin the number of trips they take and the distances they travel by car.

This, naturally, reduces cumulative emissions—and the savings to be had are substantial. As the city of New Orleans, one often in the national spotlight for its climate vulnerability, notes in its climate plan, transportation accounts for 44 percent of that city’s total greenhouse gas emissions, with personal vehicles contributing the most within that category. The city’s 2017 report correctly posits: “The more we choose to move around town without using private cars, the more we can reduce our greenhouse gas pollution impact, while increasing community connection, improving accessibility, and enabling transit and cycling infrastructure to better serve those who already depend upon it.”

Road pricing would be a potent tool towards those ends, yet, reflecting our national aversion, not one of the report’s 76 pages makes any reference to it. Instead, the city hews to the standard playbook, focusing its attention on mass transit and promoting electric vehicles.

New Orleans will, for instance, “(r)edesign the regional public transit system to increase access, capacity, and efficiency” and “incentivize public transit ridership.” Among the incentives New Orleans plans to use are "Free Ride Days" and a requirement that employers who subsidize parking "offer a cash allowance in lieu of a parking space." These steps are all well and good, but in keeping with the guidance of induced demand theory, they may not take cars off the roads for long. While these plans make transit more appealing, they don’t make driving or car-centric development less appealing. To the extent that the incentives entice people out of their cars and onto mass transit, others will observe the lowered time-cost of car commuting and adjust their use of the roads to make up the difference, leaving us little or no better than before with respect to traffic congestion or emissions.

The city’s electric vehicle plan is more insidious. On that front, New Orleans “is developing policies to support the expansion of electric vehicle charging around the city to increase the accessibility and convenience of electric vehicles,” and “will continue discussions with stakeholders and encourage adoption of electric vehicles.”

In the popular imagination, electric vehicles are the clean cars of the future; in reality, electric vehicles shift a portion of the emissions of greenhouse gases from vehicle tailpipes to power-generation sites. According to the U.S. Department of Energy, a car fueled by gasoline emits 11,435 pounds of carbon dioxide equivalent (CO2e) annually and an average U.S. electric vehicle generates 3,932 pounds. To be sure, that is a meaningful difference, but the remainder is not trivial, and regional variations in generating sources are quite consequential. In the state of Washington, where hydro power rules the roost, an EV makes a much bigger dent in emissions than in a state like Kentucky, where coal predominates. In the Bluegrass State, the average EV emits almost 8,000 pounds of CO2e, just 30 percent better than a gasoline car.

Further, the emissions that are cut by EVs are already accounted for through federal tax credits for EV buyers of up to $7,500. In fact, according to an estimate by the Niskanen Center, the current federal subsidy regime for EVs is actually overpaying based on the emissions they save.

The problems do not end there. Though electric vehicles eliminate tailpipe emissions, they still add to local air pollution due to emissions of another kind. The non-tailpipe pollution that cars generate, such as from their tires and brake pads, accounts for 85 percent or more of particulate matter from traffic, according to a study by University of Edinburgh researchers. Due to their higher weight-to-frame ratios, EVs might even create more of this pollution than conventional vehicles of the same dimensions.

The most damning case against EV subsidies, however, is that they further entrench the car-based status quo for urban development, exacerbating most of its dire environmental consequences.

Catalyzing Density, Discouraging Wanton Sprawl

By presenting the cost of road usage to road users, road pricing helps a local economy’s development patterns better reflect the true cost of individual choices. By leaving roads un-priced, we have effectively subsidized road usage and incentivized sprawling development for decades. According to an analysis for the World Bank performed by Istvan Bart of the Climate Strategy Institute, urban sprawl bears more responsibility for increased emissions from transportation than either population or GDP.

Under a road pricing system, people will take more seriously the costs of their residential and transportation choices. Road pricing will subtly, not coercively, influence development in favor of density, simply by making the costs of sprawl visible. Whereas subsidies for electric vehicles are biased toward wealthy car-buyers, a road pricing strategy prompts a more comprehensive consideration of cost that can have progressive effects, among which is the viability of walkable lifestyles.

Moreover, a downstream effect of road pricing is that in addition to reducing emissions from the roadways it can reduce our emissions from buildings as well. The apartment buildings that supply housing in dense areas consume far less energy on a per-household basis than do single-family homes. By sharing walls, apartments insulate one another and thus use less energy for heating and cooling, the two biggest energy expenditures for residential buildings on average. In 2015, according to the U.S. Energy Information Administration, the average household living in a single-family home consumed nearly three times more energy than a household living in an apartment building with five or more units. Recognition of the true cost of road use would promote higher-density development over time.

What Evidence do We Have on Road Pricing?

While it has not gotten traction in the United States, road pricing has served a number of cities well in Asia and Europe. The paragon of road pricing is the Southeast Asian city-state of Singapore, which implemented road pricing in 1975. Singapore’s road pricing scheme has not only spared it from the snarled traffic that plagues most cities in its region, it also saves roughly 30,000 tons of greenhouse gas emissions compared to what it could otherwise be expected to emit each year.

Across the Atlantic, London and Stockholm are two cities that have had a measure of success with road pricing. Central London introduced road pricing in February 2003. The impact on emissions was considerable, with the 2008 Central London Congestion Charging Impacts Monitoring Annual Report documenting that carbon dioxide emissions had dropped 15 to 20 percent and fine particulates and nitrogen dioxide had dropped 10 percent since the program began. Stockholm, which began road pricing in 2007, has similarly benefited.

These three cities utilize different mechanisms, but yield positive results in terms of transportation efficiency and emissions. Importantly, they have continued to benefit as their populations have grown. Today, the London metro area has 20 percent more people than in 2003; Stockholm has 10 percent more people than in 2007; Singapore has double the population it had in 1975.

The next global city to implement road pricing could be Vancouver, where the city council will vote in 2023 on what it calls “comprehensive mobility pricing.” The Vancouver plan aims to place road-use within the broader context of environmental planning. Instead of subsidizing mass transit while leaving road-use unaddressed, Vancouver, should the council agree, will build a coherent, efficient, affordable, and sustainable system. As indicated by a 2018 study commissioned by the city, road pricing can catalyze a virtuous cycle in which mobility costs more directly influence land-use and development patterns.

Here in the U.S., New York City stands as both a beacon of road pricing hope and a cautionary tale. As a geographically cordoned borough with limited points of access, Manhattan is a natural candidate for a system resembling Singapore’s road pricing scheme in its central business district. Encouragingly, the New York state legislature passed a bill in 2019 authorizing the Metro Transit Authority to implement a congestion pricing scheme extending south from 60th Street to the Battery.

Three years later, however, the plan has yet to materialize. As Ezra Klein wrote in the New York Times in June, an onerous review process has pushed New York’s plan far into the distance. One cause of the delay is federal law, which stipulates that policies pertaining to roads funded or partially funded by Washington are subject to federal oversight. Because the city’s roads fall under this umbrella, the federal government now holds the keys to New York’s implementation of the plan it voted for in 2019. Under a Trump administration that was implicitly hostile to the plan, the federal process went nowhere. Now under the Biden administration, progress is underway, but remains daunting with a 16-month schedule of public meetings and traffic analyses beginning this year.

An American Opportunity

Many Americans blanch at the idea of being charged to drive and New York’s plan has faced significant opposition from politicians representing regions perceived to be on the losing end of the Manhattan plan. New Jersey Governor Phil Murphy, while campaigning for re-election in 2021, said “we’re not going to relent if New Jersey commuters are discriminated against, period” and suggested the Garden State might disrupt the plan by “vetoing the minutes of the [jointly administered] Port Authority.” New York Assembly members representing the Bronx, Queens, and Brooklyn have voiced similar dismay.

In a recent Democratic Party primary debate, New York Governor Kathleen Hochul, too, hesitated to champion the plan. “We’ve been in negotiations,” she explained, “with the federal government that has the say on the next step and they have now put some other—let’s call them hurdles—in the way that we have to overcome.” Hochul indicated that “now is not the right time” and that implementation would not begin within the next year “under any circumstances,” meaning that the likely rollout date will not come until 2024. While she has since said that she supports the plan “100 percent,” Columbia University’s Steve Cohen thinks Hochul’s hesitation to press harder for near-term implementation is a political calculation. According to Cohen, Hochul doesn’t want “to run against Republicans this November having raised any taxes. I get that. So, the governor and the MTA are content to hide behind the ‘oh-so-complicated’ federal review process.”

As the New York saga signals, some opposition to road pricing is unavoidable. When something that has previously been free-of-charge suddenly costs money, its most frequent users are bound to feel aggrieved. But since road pricing results in a better roadway experience, it can even benefit drivers in some ways. Road space, after all, is scarce and ought to be treated as such, rather than be left un-priced and over-used. As UCLA Institute for Transportation Studies scholars Michael Manville and Brian Taylor cleverly analogized, “(i)f Starbucks began giving its coffee away for free, pretty soon its stores would run out of coffee, especially at times when most people want it. When cities let drivers use their roads for free, they tend to run out of road, especially at times when the roads are most in demand.”

Road pricing delivers benefits to road users who are willing to pay for the scarce resource of road space. The better driving experience—that is, the experience of driving at the speed intended by a road’s engineering—also supports the environmental case. Traffic congestion results in inordinate stopping-and-starting that increases emissions. Smooth traffic flows reduce the need for braking and accelerating, the main culprits of both non-tailpipe and tailpipe emissions.

Moreover, and contrary to the concerns of the dissenting New York Assembly Members, road pricing promotes the Democratic Party priority of social equity. In the current American patchwork of transportation emissions policy, electric vehicle subsidies flow to wealthier Americans while Americans whose budgets, needs, and preferences lead them to drive with gasoline and diesel shoulder the burden of motor fuel taxes. Road pricing could partially re-balance this distortion by eliminating EV free-riding and potentially replace fuel taxes. Critically, as is done in Singapore, a road pricing system can classify and charge vehicles based on their characteristics, such as footprint dimensions, weights, and emissions output. Furthermore, drivers (taking into account all vehicle types) tend to be wealthier than non-drivers. This tendency prevails in New York City, where, according to the New York Community Service Society, “outer-borough households in poverty are nearly three times more likely as high-income outer-borough households to lack a motor vehicle.”

Far from being an infringement on freedom or a burden on lower-income Americans, road pricing would, in the long term, transfer the costs of driving from the general population to drivers themselves, while providing greater benefits to those drivers in return.

Road pricing is a holistic and effective strategy for enacting environmental improvements via transportation policy. It would present Americans with a fuller picture of the cost of their transportation choices, would improve the driving experience of roadway users, and it would reduce the emission of greenhouse gases and local air pollutants, as it has in cities around the world.