A future road funding challenge may not be such a challenge at all
Funding roads is a perpetual cause of concern and budgetary give and take around the world. From the United States to India, Norway to South Africa, discussions on forums and at conferences focuses on how to generate enough funding to keep up with the need to expand on and maintain road infrastructure.
Wired magazine recently reported: “America needs billions to fix its crumbling, crappy roads. But no one's got that kind of money and the Highway Trust Fund—Uncle Sam's primary means for paying for road construction and repairs—teeters on insolvency.”
Enter another – albeit future – spanner into an already complicated works. Electric vehicles…
In many, if not most, countries around the world, part of the budget for the maintenance and expansion of road infrastructure is funded through a fuel tax or levy. How are road agencies and governments going to continue providing sufficient funding for roads in a world where that funding is already in short supply?
There are solutions being proposed all the time. The University of California’s Davis' Institute of Transportation Studies has proposed the electric vehicle owners pay a mileage fee while petrol-powered cars continue to pay fuel levy’s on their fuel.
In the US, there are states, such as California, that charge an extra registration fee for electric vehicles. However, according to Alan Jenn, a UC Davis research scientist with the Plug-In Hybrid & Electric Vehicle Research Centre, this is not a sustainable solution.
"The California zero-emissions vehicle registration fee doesn't support the long-run funding of transportation infrastructure, nor is it equitable for drivers of electric and hydrogen vehicles," said Jenn.
"California now has the opportunity to support alternative funding mechanisms," Jenn said. "Our study finds that a per-mile road charge, designed specifically for zero-emission vehicles, is a relatively low-cost and sustainable solution to funding our roads."
Jay L. Zagorsky, a senior lecturer at Boston University wrote in The Conversation recently that another possible solution lies with the charging stations which are a vital element of any electric vehicle ecosystem.
“They operate just like gas pumps, only they provide kilowatts of electricity instead of gallons of fuel,” Zagorsky says. “While electric vehicle owners are free to use their own power outlets, anyone traveling long distances has to use these stations. And because charging at home is a hassle – requiring eight to 20 hours – I believe most drivers will increasingly choose the convenience and speed of the charging stations, which can fill up an EV in as little as 30 minutes.
“So, one option could be for governments to tack on their taxes to the bill, charging a few extra cents per kilowatt ‘pumped into the tank.’ Furthermore, I would argue that the tax – whether on fuel or power – shouldn’t be a fixed amount but a percentage, which makes it less likely to be eroded by inflation over time.”
There are other options being explored around the world – and while the wholesale adoption of electric vehicles in Africa is likely to be significantly slower than in other parts of the world, this is a conversation African road agencies and governments need to start having.
At the Africa Road Infrastructure and Investment Congress 2019, one of the conversations we will be having will be around the implications of electric vehicles on road taxes and roads agencies. This will be part of our “Future proofing your road infrastructure” session in which we will take a look into our crystal balls and consider what the road infrastructure of the future could look like.
Other discussions will focus on:
The role of pension funds in funding transport infrastructure
National road development plans
The multi-lateral and donor universe in Africa
Regulatory, legal and technical frameworks
Traditional project funding models
PPPs and transport infrastructure