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Green and fair mobility for everyone How paying for yourself is better for society and the environment Created by Rayan Aebi, Panos Alamanos, Giannis Alexou October 15, 2015 Presented by Mario Malzacher Growth expectations for private

  1. Green and fair mobility for everyone How paying for yourself is better for society and the environment Created by Rayan Aebi, Panos Alamanos, Giannis Alexíou October 15, 2015 Presented by Mario Malzacher

  2. Growth expectations for private mobility OECD: Increase by 30% in average Non-OECD: Increase by a factor of 2.5 to 3.5 (i.e. 350%)

  3. Externalities of transport Positive effects Negative effects - Externalities Uncompensated negative cost that affects a party who did not choose to incur that cost

  4. Global warming A serious economic th A threat • Climate-change is the biggest threat to economic recovery (Angel Gurria, OECD, 2009) • Failure of climate-change adaptation is in the top 5 risks in terms of Impact (WEF, 2015) • The insurance industry estimates the potential economic damage, caused by the impacts of global warming, to be hundreds of billions of dollars each year. (WWF, 2015)

  5. Fossil fuel and transportation • Fossil fuel use accounts for 57% of global greenhouse gas emissions (IPCC, 2007) • Almost all (95%) of the world's transportation energy comes from petroleum-based fuels, largely gasoline and diesel. (EPA, 2013)

  6. Growth expectations for mobility and transport

  7. Growth expectations for mobility and transport Global car gridlock will impose a lot of costs on society that drivers don't pay for

  8. Externalities due to transportation Externalities by mean of transportation (EEA, 2002) 8% 13% 58% 21% Car (private vehicle) Heavy-duty vehicles Other road vehicles Rail and water transport

  9. Costs of externalities • Environmental damage (for CH approx. 9bn, ARE, 2010 ) • Local , regional as well as international • Congestion (opportunity costs; for CH approx. 3bn, ARE, 2010 ) • In the EU + Norway and Switzerland (EU+2) external costs from transport were estimated at 8 % of GDP (Infras/IWW, 2000)

  10. Stop subsidizing mobility Who should pay for th the ext xternalities ? Government? Tax payers? Victims?

  11. Stop subsidizing mobility How to solve th the problem? • Often proposed solution: Invest in public transport (subsidize public transport) and environmental regulations (enforcement) • But -> COSTLY (unfair taxation, for CH approx. 8bn), uncompensated externalities of public transport exist as well (for CH approx. 1bn), etc.

  12. Stop subsidizing mobility User-pays pri rinciple Cost-effective solution Internalizing externality costs • I ndividual users pay! -> Use price system to internalize externalities • If individual users pay for externalities of their own mobility -> no subsidies for public transport is necessary

  13. Stop subsidizing mobility User pays pri rinciple • Everyone pays his fair share • No free riders • All costs are incorporated -> no externalities anymore

  14. Internalize m obility’s externalities Put t a pri rice on mobility Stop subsidizing Use money to Phase out fossil Tax on mobility fuel subsidies reduce taxes mobility

  15. Internalize m obility’s externalities Put t a pri rice on mobility Stop subsidizing Use money to Phase out fossil Tax on mobility fuel subsidies reduce taxes mobility

  16. Phase out fossil fuel subsidies • Phasing out fossil fuel energy subsidies would have benefits more than 15 times the cost (Copenhagen Consensus, 2015) • Implementable today across the entire world • Especially in developing countries with extensive oil & gas subsidies

  17. Internalize m obility’s externalities Put t a pri rice on mobility Stop subsidizing Use money to Phase out fossil Tax on mobility fuel subsidies reduce taxes mobility

  18. Stop subsidizing mobility Pri rivatize th the public tr transportation sector • Subsidies are generally inefficient • Subsidies are in essence payments by the government to keep an ineffective firm in business • Subsidies are dangerous • Set incentives for overuse of public transport • Urban sprawl (additional increase in mobility) • Do not compensate externalities  Discard public transportation subsidies • Transparent and fair pricing • Producers ’ incentives aligned with their business model

  19. Internalize m obility’s externalities Put t a pri rice on mobility Stop subsidizing Use money to Phase out fossil Tax on mobility fuel subsidies reduce taxes mobility

  20. Tax on mobility Ext xternalities • Noise nuisance • Air pollution • Climate warming • Water & Soil contamination • Shrink of biodiversity • Land take • Traffic jams • Accidents • Production externalities of vehicles

  21. Tax on mobility Ext xternalities = FULL EXTERNALITY TAX COST Defined by personal mobility data according to means of transportation and local levels of taxation

  22. Tax on mobility Fair pricing – Smart algorithm Factors Evaluation + measurement Peak hour (congestion time) Time of the day Distance GPS location Location GPS location Fuel efficiency Car reference Noise level Car reference Particles and greenhouse gases levels Car reference Amortized production externality Car reference (Life cycle assessment) Impartial transparent measurement agency: NGO

  23. Tax on mobility In Incentives Cost of use w/o externality cost (CHF) Externality cost (CHF) 15 60 40 60 45 35 CAR BUS TRAIN NB: Estimation for a given distance

  24. Tax on mobility In Incentives • Easily implementable today across the entire world • GPS technology is widespread and relatively cheap around the globe • Price incentives for the consumer to pursue the most efficient mobility solution • Strong incentive to innovate

  25. Tax on mobility In Innovation and smarter business solutions • Sharing economy • Self driving cars • Clean tech (e.g batteries, cars, buses, trains, planes) • New means of transportation (e.g. hyperloop by Elon Musk)

  26. Internalize mobility’s externalities Put t a pri rice on mobility Stop subsidizing Use money to Phase out fossil Tax on mobility fuel subsidies reduce taxes mobility

  27. Better tax system Use money to reduce taxes Tax redistribution Local Global • Commune • Federal • Canton • (International) • Allow for a better tax system -> Reduce detrimental taxes (e.g. income tax in CH)

  28. A bright green future Towards a a better world This smart mobility policy will empower • More efficient, transparent and fair use of transit transportation despite mobility growth • Less production of externalities • Compensation of social cost of mobility through individual user • Save real money and invest in our future

  29. A bright green future Towards a a better world Stop Tax on Use money to Phase out fossil subsidizing fuel subsidies mobility reduce taxes mobility Any questions ? Please contact me at: rayan.aebi@gmail.com

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