Is pay-per-mile the future of road travel?

March 13, 2022

In January this year, London Mayor Sadiq Khan called for the introduction of a pay-per-mile driving charge to curb emissions and combat climate change. He also suggested a daily vehicle charge of 2 pounds on top of this.

London currently operates a congestion charging zone where vehicles must pay to drive within the central city district. Any vehicle that crosses the congestion charge boundary to enter the city is subject to a fee of 15 pounds.

An Ultra-Low Emission Zone (ULEZ) is another type of congestion charge zone that covers the same area (and some additional roadways), targeting the most polluting vehicles.

Certain vehicle types that enter the ULEZ zone are forced to pay an additional 12.50 pounds to use the roadways within the zone. Therefore, a single trip into London can cost some drivers a hefty 27 pounds (equivalent to about 54 USD).

The suggested pay-per-mile scheme would essentially replace these congestion charging zones.

But why change the current road pricing system?

A report by Element Energy recently revealed that a 27 percent reduction in car traffic is needed by 2030 if London is to meet its net-zero ambition target. A pay-per-mile scheme would help reach this target by pushing people towards cycling, walking, or using electric vehicles instead.

How much the fee would be is unclear. But motorists needn’t be concerned about pay-per-mile charges being introduced anytime soon as the technology to charge drivers by the mile is still years away from being implemented.

Pay-per-mile over congestion charge zones also poses huge financial challenges. A successful and just system would require finding a delicate balance between cleaner air and financial stability for those on lower incomes.

Then there is the additional challenge in that central city buses would also need to be electric – something the London Mayor said he can’t commit to until 2037.

Pay-Per-Mile in the US?

Congestion pricing is on track to begin charging Manhattan motorists as early as next year. Operating similarly to London’s congestion charging zone, the MTA will charge a toll on any vehicle entering New York south of 60th street in Manhattan.

With the roll-out of New York congestion pricing already delayed, it seems unlikely that a per-per-mile system will be implemented in the United States anytime soon.

However, aside from traffic congestion and climate change, there's another problem that may push some States into adopting a pay-per-mile program earlier than we think.

The problem?

Electric vehicles.

Electric vehicles will play an essential role in solving the world’s climate puzzle. The thing is - governments all over the globe currently rely heavily on vehicle and fuel taxes for their budgets.

A phase-out of petrol and diesel cars for climate-friendly electric vehicles means billions of dollars per year in lost revenue - and this gap will need to be filled.

States like Oregon and Utah have already begun trialing new voluntary road user charges known as vehicle mileage taxes.

Drivers of electric vehicles are being asked to enroll in a voluntary experiment that involves pay-as-you-go tolling.

As more electric vehicles hit U.S. roads, we will likely see some alternative to fuel and road user taxes introduced.

Pay-per-mile pricing offers an equitable alternative that charges drivers their fair share for using public roads.

However, there are still several challenges State governments must navigate to ensure pay-per-mile programs will run smoothly.

So, although it’s impossible to say if or when pay-per-mile pricing will replace current congestion zones, we think it’s safe to say it’s still a few years away yet.