Congestion Pricing as a Solution in America?
August 18, 2022
How do we reduce U.S. greenhouse gas emissions in transportation? The recent passing of the Inflation Reduction Act and the EV incentives to go along with it will help in theory, though that doesn't do enough to get people out of their cars, as implementing local policies and consumer trends in general can do. Currently, transportation is the largest source of greenhouse gas emissions and about 60% of those emissions are from personal automobiles and trucks, according to the EPA. ⅓ of all car trips are under 3 miles in the U.S. However, micromobility still only accounts for less than 5% of all trips in the U.S.
In order for this to change, we need to have more discussions about bold ideas and experiment with new policies. The convergence of higher oil prices due to the Russian aggression and war in Ukraine, inflation, and the rise of micromobility in a post-COVID world have led to congestion pricing actually being a realistic plan for large U.S. cities, starting with New York.
Congestion pricing is not a radical idea. If the free market funded transportation infrastructure, they would figure out a way to generate a return on investment. The public sector is essentially doing the same - trying to recoup some of their investment so that it can be allocated towards lower carbon emitting forms of mobility. In its simplest form, it taxes cars to fund transit and cuts down on pollution and congestion in the densest parts of the city that are already walkable and bikeable, encouraging more people to not drive or use a taxi/ride share unless they have to, or are willing to pay a premium for it.
Since congestion pricing is still a novel idea in the U.S., it’s best to look outside of the country to 2 places where it has been implemented for some time (London and Stockholm), and one that recently passed, to be implemented (Tel Aviv).
In London, congestion pricing has been in effect since 2003, and costs the equivalent of ~$15 to drive into Central London from 7am to 6pm during weekdays. Exemptions include offering 90 percent discounts to residents that live in the congestion zone. As part of Mayor Khan’s decarbonization priority, an ultra low emission zone (ULEZ) was also rolled out, in which he claims has halved toxic air in the central city. The first year of congestion pricing saw a 38% increase in transit ridership, a 30% decrease in traffic, and a 12% decrease in greenhouse gas emissions. According to the European Cyclists Federation (ECF), in the first ten years since the implementation on congestion charges, London saw a 66% increase in cycling rates and 40% reduction in crashes.
Stockholm’s congestion pricing is pretty similar to London, and includes exemptions for motorcycles and foreign-registered vehicles to help with tourist ease of travel. The first year of the program resulted in a 5% increase in transit ridership, a 22% decrease in traffic, and 14% decrease in greenhouse gas emissions, and also a similar 66% increase in cycling, according to the ECF.
Israel’s cabinet recently approved a rush-hour congestion charge for Tel Aviv, and will go into effect in 2024. The funds collected will enter into a five-year plan to improve public transportation. Mayor Huldai of Tel Aviv said that they are “inverting the transportation pyramid - prioritizing walking, cycling, and public transportation over the private car.” Most of the largest tech companies in the world have offices in Tel Aviv, and are seeking to retain and attract employees by offering employees showers and bike storage at the office, employee bike sharing, and locating their offices close to train stations so they are within the first and last “scooter mile.”
What many people don’t realize is that the first phase of congestion charges is already in effect in New York - a per-trip surcharge on taxi and rideshare trips. The second phase was slated to be rolled out in 2021, but the federal government bogged down the progress, and there was a pandemic. This is the phase that is being hotly debated locally in New York. Last week, the MTA released the Environmental Assessment for what is officially known as the Central Business District Tolling Program. The CBD zone is all of Manhattan south of 60th Street, outside of FDR Drive and the West Side Highway that ring Manhattan, as shown below. A fee could range anywhere from $5 to $12 to enter the zone for cars, and upwards of $25 for trucks; though, all of these details are still in the works.
There is a LOT of chatter on Streetsblog NYC that gets deep into the weeds on this issue. There are going to be exemptions for emergency vehicles and people with disabilities, discounts for residents of the congestion zone, and possibly tax credits for people making less than $60k per year. However, who does and does not get an exemption is a politically charged challenge to work through, and the more exemptions there are, the less effective the policy can be in funding transit - one of the primary goals.
Also, there is a fear of such a policy having an unintended reverse effect on disadvantaged communities, that could counter the work that the USDOT has earmarked for Reconnecting Communities, essentially helping to fix the highway development that destroyed primarily black and brown neighborhoods in the 60’s and 70’s. Some argue that the congestion charge will simply push traffic to places outside of Manhattan like The Bronx Expressway, cutting through neighborhoods that already have poor roadways, noise, and pollution issues. However, the reality is that the transit funding crisis is exacerbated without new revenue streams, and it possibly makes things worse if we don’t find creative ways to fund public transportation. There is estimated $1 billion per year that can be generated from the tolling program. $1 billion a year in an annual MTA budget of $17 billion some might say is not that much, but it’s not nothing, and a 6% increase in funding from this single source will be helpful for improving trains, buses, and service in general.
One thing that people often forget in heated debates is that policies do not mean that it is permanent. If the negative externalities outweigh the positive benefits, then roll it out in a way that makes it possible to roll it back. However, inaction leads us on a road to nowhere, with compounding costs that have to be dealt with later down the road. Easier said than done. In his New York Times column, Ezra Klein writes, “It raises revenue, rather than costing money. You don’t need to build new tunnels or dam rivers or run a train track through a city. As far as major climate policy goes, this one is easy. And yet, it’s proved to be so, so hard.” He goes on, “Every year without congestion pricing is a year with more cars, more pollution, more asthma attacks. Whose job is it to tally those costs?”
I agree with Klein’s assertion that the current USDOT bureaucracy is not equipped to be able to roll out the fast solutions, experimentation, and piloting that is needed currently to solve the interconnected issues of curbing greenhouse gas emissions, crumbling infrastructure, and more equitable access. We definitely need to work on easing the federal bottlenecks that have held up implementation of New York City’s congestion pricing program, and also at the same time, empower local and regional transportation leaders to find ways to push forward creative solutions such as this. Congestion pricing in Manhattan is more of a tri-state and local municipality issue, than it is a federal issue.
Cities need more leaders that are champions of new mobility solutions and technologies and learn from the private sector startup approach, similarly to how the other Klein, Gabe Klein discusses in his book Start-up City. Roll it out quickly as soon as possible while setting the expectations that there will be issues and problems with it, quickly iterate, and then roll out V2, iterate, V3, and so on. Otherwise we’re stuck in this planning for the future while the opportunity for real changes passes us by. Now is time for bold ideas, plans, and leadership from local and regional leaders to help reduce our addiction to oil.
The nudge towards low or no carbon emitting mobility options such as bikes, e-bikes, and e-scooters is naturally what I’m excited to see occur. Bicycling and micromobility are rapidly growing as preferred transportation modes, and my own personal experience of riding a new Lyft e-bike through the streets of Manhattan two weeks ago, convinced me that New York City is going to thrive as a place with fewer cars.
Fortunately “Inflation Reduction Act'' passed to help fight climate change, but unfortunately, it was a compromised deal, with all of the incentives for bicycles and micromobility slashed from the budget. Up to $900 per bike was included in the original version of the bill that passed the House about nine months ago and now there is no credit being offered when you file your taxes next year, as compared to the $7,500 tax credit for new electric automobiles. This would have been an incentive to drive less, but since it didn't pass, local and regional leaders need to act in creative ways, such as in Denver, where they offered an e-bike rebate of up to $1,200 per bike. It was such a success, that within less than a month, they ran out of the $3 million annual amount to be allocated to rebates.
Giving people options and choice and getting us closer to having the true cost of the mode reflected in the price that consumers pay is really a free market way. Heavily subsidizing personal car transportation so that it’s easiest to drive and not as easy to use other modes has led to negative externalities - traffic, polluted air, a dangerously warming planet, so it’s about time that we experiment and test pay per use charges for driving a car - not just in New York but other cities in the U.S. that rely on public transportation, are becoming increasingly congested, and are actively trying to get people out of their cars. Cities such as Boston, Washington, D.C. Seattle, and LA have all been having discussions about the merits of congestion pricing, and are closely following how it rolls out in New York.
The case for Phase 2 congestion pricing in New York is now, and the federal red tape needs to be cut, so it can roll out in early 2023.
