Highway Robbery: Insights into the Effect of Electric Vehicles on Road User Charging

In the face of environmental degradation, the depletion of fossil fuels, and the impending climate crisis, the transition towards alternative fuel sources has never been more pivotal. Electric vehicles (EVs) are one method with which society can lessen its carbon footprint. Implementation, however, can have negative fiscal impacts on government revenue. Our paper assesses these impacts and helps to understand how countries are adjusting to falling fuel tax revenues resulting from increased EV uptake.

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As more drivers transition to electric vehicles (EVs) in response to the climate crisis, environmental degradation, and fossil fuel depletion, the fiscal implications of this shift remain uncertain. While EVs bring clear environmental benefits, they also present challenges for road user charging (RUC) systems, especially as governments face declining fuel tax revenues and rising inequality.

This report explores the effects of increased EV adoption on RUC systems and outlines the strategies being implemented globally to address these challenges.

Key areas covered include:

  • Fiscal Impact of EV Adoption: Understanding how traditional fuel-based RUC schemes are becoming obsolete and how this may exacerbate socioeconomic inequality.
  • Global RUC Solutions: A comprehensive analysis of how different countries, including the U.S., Denmark, Switzerland, the Netherlands, and New Zealand, are restructuring their RUC systems to account for EVs. This includes innovative approaches like distance-based fees and electric road systems.
  • Pilot Programs: Insights into pilot schemes in the U.S. and abroad aimed at maintaining revenue streams while encouraging EV adoption, such as Texas’ consideration of carbon taxes or fee-per-mile systems, and New Zealand’s adjustments to registration taxes.
  • Emerging Trends: Analysis of novel solutions like distance-based tolling and electric road systems (ERS) in Japan to address revenue losses and EV infrastructure needs.

Based on exclusive data from the 2023 Road User Charging Conference series, this report offers a deep dive into how different regions are adapting to the rise of EVs and what the future holds for road user charging systems worldwide.