Net Zero requires reappraisal of the road programme: but how?

IN FEBRUARY the Court of Appeal ruled against Heathrow’s third runway proposal because it had not taken account the Government’s legal commitments to reduce carbon emissions. The Government decided not to appeal. Now the DfT has published its important new Decarbonising transport: setting the challenge report, which, as transport secretary Grant Shapps wrote in the foreword, implies significantly reducing car use and rein- stating public transport, walking and cycling, as the preferred modes of choice.

There have been widespread suggestions of a dissonance between the decarbonisation strategy and the ‘largest ever’ road programme, which has planned expenditure of £27bn over the next five years. I’m aware of current plans from voluntary organisations to initiate a similar legal challenge to the road investment strategy, while scenario work by the CREDS project, led by the Institute for Transport Studies at the University of Leeds, suggests the need for car use reductions for longer distance trips as well as shorter urban ones. There is also a report expected shortly on the carbon effects of the whole programme by the respected environmental consultancy Transport for Quality of Life.

I would argue we need a thorough re- appraisal of the road programme as a whole, and its component parts, and its alternatives. Here I consider just one of the changes that would be necessary, namely the way in which carbon dioxide emissions are estimated and valued in formal road appraisal.

Currently, promoters of road projects report the quantity of carbon resulting from the project, give it a money value, and compare it with the value of intended time savings. There are three problems with this approach.

First, the carbon arising from fuel is included, but the embedded carbon, in manufacturing the vehicles and for construction and maintenance of the highway, are not included in the benefit:cost calculation because it is argued that they have already been paid for in buying carbon credits.

Second, it is assumed that most of the carbon emissions from traffic using the road are due to a background trend of traffic growth, with only a small proportion, the induced traffic, actually being attributed to the scheme. But what if the background traffic has been systematically overestimated, and its structure oversimplified, while the induced traffic has been correspondingly systematically underestimated? This happens because while the best models may include some mode shift and changes of destination, they do not include changes in the level and type of car ownership, the number or frequency of trips, styles of owner- ship and sharing, or consequential changes in land-use patterns, nor do they comprehend the dynamic build-up of these responses over time.

Third, the nominal money value of the carbon that is counted is not derived in a similar way to any of the other social costs in the appraisal. It is not high enough to be the price that, if it were charged, would deliver the legally deter- mined carbon target. It has no connection to an idea of a public ‘willingness to pay’ to avoid the climate consequences of excessive carbon. It does not measure the economic costs of those consequences. It is instead based on an estimate of the cost of the cheapest available method, in theory, of reabsorbing the (small) amount of carbon attributed to the project, but this at present remains a notional cost without a price being charged, and without an intention to do so, specific plan, budget, or (critical for carbon) a timescale. 

Up to now, all road scheme appraisals have taken a baseline forecast of growing traffic. The new decarbonisation strategy requires that we will use cars less, by a substantial amount. So the appraisals to date are all based on a future that is different from the one in the strategy.

The practical effect is that each project appraisal has separately reported that its carbon is a microscopically small per- centage of the total carbon budget for the whole economy (in the order of a thousandth of one per cent). Note that this is a unique comparator: no equivalent comparison against a whole economy resource total is ever made for any other impact of a road, e.g. employment, time, or national income, though the same minute percentages would inevitably apply. In practice, it always leads to the conclusion that carbon impacts are not material. They have no impact on the choice whether to approve the project or not.

So for individual schemes, carbon is taken to be close to irrelevant, but this depends on assumptions that the fore- casts are right, and that somewhere else the carbon credits system is working perfectly, with properly set prices. Since the targets are now more stringent, and we know there is a gap between the current and necessary demand trajectories, that would imply that the price of carbon credits will have to be materially increased, and the shadow cost to road users converted into a real price. The later this is left, the higher the increase, drastically so as the target date approaches. Until that is done, appraisal will be faulty. The wider point is that even if this works for individual schemes, it does not for the whole programme. It is not credible to assume that ‘the biggest road programme ever’ would have no effect on trip rates, car ownership or land-use.

Up to now, all road scheme appraisals have taken a baseline forecast of growing traffic (even during periods or for places where it has been decreasing). The new decarbonisation strategy requires that we will use cars less, by a substantial amount. So the appraisals to date are all based on a future that is different from the one in the strategy. The implicit paradigm for road construction at a time of high traffic growth – ‘slowing down the pace at which con- gestion gets worse’ – does not work for carbon emissions, which actually have to be reduced in absolute, not relative, terms, (whether they are paid for or not). This is similar to the way permit- ted levels of noxious emissions affecting health are defined as standards, not just as seeking to reduce the pace at which they get worse.

Questions for the reappraisal would be how do the programme, and its individual schemes, contribute to success of the strategy? And how would they perform in a future where the behavioural changes necessary for the decarbonisation strategy to be successful had been made? The review would need also to track the quantities of embedded vehicle and construction carbon; should take account of both induced and trend traffic growth; increase the allowance for induced and reduced traffic; appraise the programme as a whole allowing for a wider range and timing of short and long-term effects on traffic, land-use and behavioural effects than has been applied to separate schemes; and include the interactive effects of other transport policies.

The signs are that the present road programme, if it is implemented, reduces the possibility of success of the carbon strategy, by encouraging rather than reducing traffic growth. But if, nevertheless, the carbon strategy succeeds, aspects of the road programme will have been unnecessary and do not give good value for money.

Where does that leave the ‘value of carbon’? Maybe it becomes less relevant. Laws such as which side of the road to drive on, or how much pollution vehicles are allowed to cause, or that vehicles must be insured, are often subject to cost-benefit calculation before they are agreed. But the law, once passed, becomes a prior condition, not a trade-off.

More fundamentally, there are some choices that are different in principle. Consider our experience of the commitment of funds, as a policy decision, at an unprecedented scale, and with evident public support, to cope with the coronavirus crisis. The idea that it might be ‘better for the economy’ if the virus were allowed to kill as many as were vulnerable, was mooted, for a while, but we are given to understand that such calculus was never Government thinking, or has been firmly rejected, or both. For marginal changes in commensurate costs and benefits the idea of essentially economic trade-offs can be entirely legitimate. But slavery, child labour, forced marriage, famines, plagues, racial discrimination and murders also all have economic consequences. Human societies have found other ways of determining what to do about them than submitting them to an economic benefit:cost ratio, and if we do not get the policies right, current understanding is that climate change will force the pace in the most unpleasant way.

Phil Goodwin is Emeritus Professor of Transport Policy at UCL and UWE, and Senior Fellow of the Foundation for Integrated Transport.

This article was first published in LTT magazine, LTT795, 3 April 2020.